Pre-tax 529?

(regarding a pre-tax 529).

Skip, in what state was this offered and from what employer? I must admit, I've never heard of such either.

Many state plans do allow payroll deduction (if the employer also supports it) but the deductions are usually post-tax.

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Typo? Or...pre-tax with respect to state income taxes, because of something unique to the state?

-Tad

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I assume they were referring to the tax deductible contribution some states offer (not federal deduction). Nebraska is one of those states, up to $5000. I've never seen it as an employer-provided deduction, but I really like the idea.

Mike

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I think we are all in agreeance that some states allow the deduction from state income taxes. Most require that the home states plan be used.

If I understand Skip correctly, the crux of the matter is the ability to use the pre-tax payroll deduction as opposed to after-tax contributions that later get deducted from state income taxes.

As I said previously, this is news to me. Skip, I have looked at well over two dozen state and employer websites and have found nothing but after-tax deductions. Perhaps the company is mistaken (or typoed). I provided a recent and seemingly accurate report on 529s published in USATODAY and it also suggest that contributions are only on an after- tax basis.

I'd love more information on the company in question, but I must admit I'm skeptical of their claim.

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I too was skeptical but since it was in black and white we thought it was worth a shot to double check.

Since the person in question decided not to take the job offer we won't spend time investigating. But based on the responses here and my phone call to the SC 529 I am now confident that there is no such animal as a federal pre tax 529. So for whatever reason the employer has a problem with their brochure.

-HW "Skip" Weldon Columbia, SC

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