Wednesday, August 29, 2018
Bloomberg Law, IRS Clears Path for Student Loan Repayment Tied to 401(k):
An IRS decision allowing an employer to offer a student loan repayment benefit as an element of its retirement plan could open the door to other employers interested in offering similar benefits.
The Internal Revenue Service Aug. 17 gave the go-ahead to an unnamed employer’s plan to tie 401(k) contributions to student loan repayment contributions. The private letter ruling [2018-33-012], while not precedential, likely will quell concerns from employers interested in offering a student loan benefit through their 401(k) programs, but worried about complying with the law.
Employers increasingly have been interested in offering student loan aid for workers with debt. Eighty-six percent of young workers would stay with their employer for five years if they helped pay off their student loans, according to a 2017 American Student Assistance survey of 500 people between the ages of 22 and 33. ...
Under the program described in the private letter ruling, the employer would make a 401(k) contribution on a worker’s behalf if the worker was making a student loan payment of at least 2 percent of their salary for a given pay period. The employer contribution would be made regardless of an employee’s contribution to a 401(k).