Idaho Employer Tax Credit FAQs
 

For every dollar an employer contributes to an employee’s IDeal - Idaho College Savings program account, the employer receives a 20% tax credit, up to a maximum of $500 per employee per year. So, an employer could give up to $2,500 per employee and receive $500 for each person. Read the official tax law here. Employers will document contributions to each employee using the Idaho tax credit Form ID-529.

• The Idaho law does not exclude any type of employer.
• The applicable tax law for each type of employer will apply regarding how the tax credit is applied.
• The new law indicates that the contribution must be to an Idaho College Savings Program account belonging to an employee of the employer.
  • (4) As used in this section, the term "employee" means a person who, during the taxable year for which the credit is allowed, is subject to Idaho income tax withholding, whether any amounts are required to be withheld, and who is covered by the employer for unemployment insurance purposes under chapter 13, title 72, Idaho Code.

This program is not subject to the nondiscrimination rule of the Employee Retirement Income Security Act of 1974 (ERISA). Idaho Code Section 63-3029M does not stipulate participation rules. You can choose to contribute to any or all employees.

The 529 account contribution would be additional income to the employee and would be reported as income on the W2. It is subject to taxes and withholdings.

Yes! Employees can also deduct employer contributions made on their behalf from their Idaho state income tax.

There is no limit on the number of accounts an employee can have. The employer can choose how many of the employee’s accounts they would like to contribute to.

The Idaho law specifies that in order for a business to receive the tax credit, the contribution must be made to an employee’s account. If, for instance, your employee’s spouse is the account owner, this will not meet the standard of the tax law. The employee would need to open a new account in their name at www.idsaves.org.

No. The Idaho law specifies that in order for an employer to receive the tax credit, the contribution must be made to an employee’s Idaho College Savings Program account established pursuant to chapter 54, title 33, Idaho Code.

The applicable tax law for each type of employer will determine how the tax credit is applied. We encourage employers to consult with a tax professional for advice.

Employer contributions can exceed the $2,500 that would provide the full Idaho tax credit provided the contribution does not cause the account to exceed the Program’s maximum account balance.

The Idaho employer tax credit will max out after an employer contributes $2,500 per employee, per year. ($2,500 *20% = $500 max tax credit per employee, per year). The credit will be less if the employer contribution is less than $2,500.

No, enrollment is always open. You can start contributing any time.

You can completely customize your participation. Some employers may require an employee to contribute funds to their personal accounts to be eligible for a 529 match, others may contribute when an employee has a new baby, work anniversary or as a bonus for performance. There are many creative ways to contribute. Contact us to discuss ideas and implementation.

• Funds should not be dispersed to the employee.
• Employers will contribute directly to the employees’ Idaho College Savings Program account(s) by sending funds to the IDeal Program via check, ACH or wire with a letter of instruction.
  • Matched funds
    • Employers who are matching funds can use the 529 Employer Boost Platform to seamlessly manage the administration and details of the transactions in one place. Learn More
  • Nonmatched funds
    • Contribute directly to your employees' Idaho College Savings Program account(s) easily by sending funds to the IDeal Program via check, ACH or wire with a letter of intent.
       

• You may contribute as often, and whenever, you like.
• If you are using the 529 Employer Boost platform, you can set up recurring contributions.

The method in which deposits are sent will determine the timeframe in which they will show up in an employee’s account. Deposits will show up approximately 10 days from the date we receive your funds. They are fully vested immediately.

There are many options for using Idaho College Savings Program funds including K-12 tuition, registered apprenticeships, two-and-four-year programs, graduate programs and some student loan repayment.

We are here to walk you through this process and answer all your questions. We also offer in-person presentations and webinars to help educate your staff about this great new benefit. Get started

Idaho employers also benefit from tax incentives with a 20% state tax credit given for direct contributions to their employees’ IDeal accounts. The employer tax credit is capped at $500 per employee, per year.¹

No. IRC 529 does not have any income limitations. Contributions to a 529 Plan are made with after-tax dollars and the earnings are not taxed provided the distributions are used to pay for qualified educational expenses.