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What if the (magnanimous) employer had a company-wide benefit plan for funding 529 plans established by employees for their children, with the amount of the annual funding being a percentage of, let's say, the salary (or total compensation?) of the employee? Would that avoid classification of the annual employer contribution as wages of the employee?

We're way outside my area of expertise here, but I think I'd stay as far away from the word "benefit" as possible. Tax law prescribes the treatment of employee benefits, and if the law doesn't say it's exempt, it's taxable.

As I said before, I think the only possible approach would be true gifts made by, but not deducted by, the employer.

Phil Marti
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