Employers have been slow to offer 529s as a benefit, let alone contribute an employer match, because of the fractious nature of the plans. Since plans are unique to their state of origin, they differ in tax benefits and performance. Some states only offer tax benefits for consumers who use their home-state plan, adding complications for companies working across several states.
“I think employers are interested in the concept of offering 529 programs, but aren’t yet convinced of the benefits,” DeLorenzo says. “With Nevada’s legislation, it becomes a free benefit to them. We believe this brings the plans up to a new level where there’s a true incentive for employers to contribute to their employees’ 529s."
Unlike 401(k)s and 403(b)s, 529 plan contributions and matches may be taxed on the federal and state levels.
According to financial analysts at Strategic Insight, Americans now have more than $230 billion in assets in 529s, up 10 percent from the same time in 2014.
Nevada’s 529 plans are among the country’s most popular college savings vehicles, but not necessarily among the state’s residents. While outsiders like Nevada’s plans for their low overhead costs and fees, Nevadans don’t enjoy some 529 benefits because the state does not have an income tax.