A corporation may want to use Qualified Tuition Plans as a method of retaining employees. If the corporation is involved in a business that employs a student, such as in the fast-food industry, there is high employee turnover rate. The corporation could use Qualified Tuition Plans, as described above to attract and keep good student employees.
Specific Details
A corporation establishes a Qualified Tuition Plan for a key employees child. The corporation makes an original contribution of $1,000 to the Qualified Tuition Plan. By the time the child is ready to enter college, the account has grown to $1,800. The entire $1,800 is withdrawn to help pay for the first year of college. The child will have $800 of non-taxable income. The employee will report compensation income of $1,800, and the corporation will receive a $1,800 tax deduction.
Potential Savings
A corporation may want to use Qualified Tuition Plans as a method of retaining employees. If the corporation is involved in a business that employs a student, such as in the fast-food industry, there is high employee turnover rate.