As employees gear to begin repaying their federal student loans in September, Betterment at Work is launching its 529 Education Savings solution, aimed at providing better student loan management to workers and families.
The 529 solution will be provided through a partnership with Ascensus, Betterment at Work said in a statement. It will allow employers to offer 529 plans, support payroll direct deposits, and provide a matching contribution, alongside Betterment’s 401(k) and other benefits.
“Adding educational savings to our benefits solution further cements our commitment to help businesses support the financial needs of their employees,” said Sarah Levy, CEO of Betterment, in a press statement. “Our customizable financial benefits can be personalized to fit each worker’s goals – including retirement savings, emergency savings, and student loan management – all in one place.”
Additional benefits include:
- Tax-advantaged savings: Funds in a 529 grow tax-free, with tax-free withdrawals on qualified distributions.
- Personalized and optimized: 529 plans can automatically adjust asset allocation so that the investment selection aligns with the beneficiary’s risk tolerance and age.
- Flexible contribution limits: While one-time contributions and balance limits vary by state, employees have control over how much they save.
- Wide range of uses: Funds can be applied to college tuition and fees, books and supplies, some room and board, and, in several states, K–12 tuition up to $10,000/year. Starting in 2024, unused 529 funds can be rolled into a beneficiary’s retirement savings without taxes or penalties.
“Betterment at Work is adding 529s because we are committed to providing innovative solutions that address the needs of a continuously evolving workforce,” said Kristen Carlisle, vice president and general manager of Betterment at Work. “Employees are often faced with the difficult choice between saving for college or planning for retirement, but they should not have to sacrifice investing for one goal at the expense of another.”
The announcement is the second this year involving Betterment at Work’s move to student loan management solutions. In February, the New York-based firm said it would offer student loan management as part of a broader financial wellness package. The company had also acquired the partner and customer relationships of Gradvisor, a platform providing personalized college savings plans.
More information on Betterment at Work’s 529 solution can be found here.
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Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.