NU Online News Service, Feb. 11, 1:27 p.m. – U.S. employers are excited about voluntary “Section 529″ payroll deduction savings programs.
Hewitt Associates L.L.C., Lincolnshire, Ill., found that 19% of the 163 U.S. employers it surveyed in late 2001 were already planning to set up voluntary college savings programs, and another 46% were thinking about adding the programs.
Section 529 of the Internal Revenue Code lets taxpayers in states with college savings programs defer income taxes on thousands of dollars in contributions each year. Beneficiaries who use the accounts to pay for college tuition, books, living expenses and related expenses can withdraw funds without paying federal income taxes on the distributions.
Program rules are so flexible that, in some states, taxpayers might be able to use the accounts to finance a few years of retirement spent taking college courses.