EDITOR’S NOTE: This story has been changed from the original print version to clarify the limits on D&B Credibility Inc.’s matching contribution to an employee’s 529 or college savings plan. It also corrects the sub-headline, which might have given the impression that D&B Credibility Inc. was still part of Dun & Bradstreet Corp.

While many companies have cut back on benefits for their workers in recent years, one Malibu firm is doing something very rare: offering an employer match for college savings plans.

D&B Credibility Inc., which provides credit monitoring services for businesses, this month launched a program to match employee contributions to college savings plans.

Setting up the program wasn’t easy. It took months to find a firm willing to administer it, among other hurdles.

But Chief Executive Jeffrey Stibel persisted, saying the employer match is a crucial element in attracting and retaining highly trained workers. And he wants to lead by example.

“We fundamentally believe this will help us as an employer attract and retain better talent,” Stibel said. “It’s something that all of our employees can use as a benefit and it’s also a blueprint for other companies to follow.”

The company has also committed matching funds for local school districts, which Stibel said he sees as crucial to training the workers of the future.

D&B Credibility, which spun off two years ago from Dun & Bradstreet Corp. of Short Hills, N.J. – employs 600 nationwide, including more than 100 in Malibu. It’s one of the few employers across the nation to offer a match for college savings contributions, known as 529 plans for their Internal Revenue Service code.

The savings plans offer a tax-advantaged way to invest money for future tuition, room, board and related higher education expenses. They are most commonly used by parents who set up investment accounts for their children years before the offspring reach college age. The accounts can also be set up for other family members or even friends or the employee’s own future education.

Earnings generated by the accounts are not taxed; nor are withdrawals. But unlike 401(k) plans, contributions to the accounts come from dollars that have already been taxed.

D&B Credibility’s matching program is similar to employer matches for more widespread 401(k) plans, except it is capped at a maximum of $2,500 a year for each employee.

Stibel’s decision to start a new type of employer match runs counter to the prevailing trend among corporations to rein in spending on employee benefits. Since the recession began five years ago, many companies have cut or eliminated their 401(k) matches, while others have converted defined benefit plans to employee contribution plans. Also, many companies are now passing on more of the health plan cost increases to their workers.

“During this recession, all we’ve heard of is layoffs and benefit cutbacks,” said Mark Wilbur, chief executive of the Employers Group, a human relations and benefits consulting firm in El Segundo. “So anytime you have an employer like this doing something more to help employees, I say strike up the parade.”

Difficult path

But it proved hard to set up the match program. Stibel said D&B Credibility executives spent nearly a year trying to find an outside company to administer the program.

“We went from vendor to vendor; most said you just can’t do this because it would be too hard to administer,” he said.

Finally, a few months ago, the company contracted with Putnam Investments of Boston.

One additional hurdle: Because employer matches for 529 plans are not tax deductible either for the employer or the employee, the employees were facing an additional tax hit on their accounts. So D&B Credibility executives decided to pick up that additional tax burden, adding it to the $2,500 cap. In some cases, depending on an employee’s tax bracket, that could be 30 percent more than the $2,500 cap.

“We hope that this is only temporary and that Congress passes a law making employer 529 matches tax deductible,” Stibel said.

Even as D&B Credibility’s plan gets up and running, there are still potential pitfalls. Wilbur at Employers Group cautioned that the plan could cause complaints of unfairness for employees who have no need to save for higher education for themselves or others.

“Despite the best of intentions, if it emerges that the benefits are spread unevenly, it could create some friction in the workplace,” he said.

Stibel said that he doesn’t expect such problems to develop, since the Internal Revenue Service allows people to set up 529 plans not only for children but also for their own future education or that of other family members or even friends.

“I myself have set one up for someone not in my immediate family,” Stibel said. “So it’s something that each and every one of my employees should be able to use, should they choose to.”

Stibel said D&B Credibility executives will be monitoring the program on a monthly basis to ensure that no such problems develop, address them if they do and to make any other necessary tweaks.

Steady growth

Congress created 529 college savings investment accounts in 1996 as a way to help parents cope with ever-escalating tuition costs and to reduce the need to take out interest-bearing loans.

The plans have slowly but steadily gained in popularity. Kris Spazafumo, manager of 529 plans for American Funds, the mutual fund subsidiary of L.A.-based Capital Group Cos., said 529 plans now hold about $160 billion in assets.

“There’s always some demand because parents face firm investment deadlines for 529 plans when their children reach college age,” she said.

Spazafumo said roughly 10 percent of all employers who offer retirement plan benefits also offer 529 plans; this percentage has grown in recent years. But very few companies actually contribute to these plans because their contributions would not be tax deductible.

“Employer matches for 529 plans are very, very rare,” she said.

Instead, employers fund tuition assistance programs for their employees, according to James Klein, president of the American Benefits Council, a Washington, D.C., association that advocates for major employers on benefit issues.

But tuition assistance programs can only be used by the employees themselves; they can’t be used to defray the cost of their children’s education.

Stibel said that’s why there’s such a need for employer matches for 529 plans.

“I really hope this catches on with other companies and that we’re showing the way,” he said.