Employer contributions to 529 plans are taxable compensation

Companies can make contributions to a 529 plan on behalf of a beneficiary (an employee or employee’s family member). The IRS says the contribution is treated as a taxable fringe benefit to the employee and is deductible as compensation by the employer. On the employee’s W-2, it’s reported as compensation whether made on behalf of the employee or the employee’s family member. #IdeaoftheDay