WHY CONSIDER STUDENT LOAN REPAYMENT BENEFITS?
- Tool to attract and retain talent
- Easy to understand
- Student loan debt = significant problem, particularly for younger employees with advance degrees
- ax advantage to employees (if structured correctly)
EMPLOYER OPTIONS FOR STUDENT LOAN BENEFITS (GENERALLY)
- Employer contribution to 401(k) plan
tied to an employee's student loan repayments
- Provide additional contribution or reallocate existing/available dollars (match replacement)
- Benefit tied to student loan repayments can get employees started toward retirement savings
- Employer contributions (or employee after-tax contributions?) used to pay off student loan debt directly
QUALIFIED RETIREMENT PLAN DESIGN ISSUES
- Examine workforce
- Is there a need?
- Is there a desire?
- Will plan be able to pass nondiscrimination testing?
- Costs
- How important is cost neutrality?
- Administration
- How to track student loan payments?
- Communication
LEGAL ISSUES/COMPLICATIONS
- 401(k) "contingent benefit"
or "anti-conditioning" rule
- A cash or deferred arrangement will not be qualified if any other benefit (other than matching contributions) is conditioned directly or indirectly on an employee electing to make or not make contributions. Code Section 401(k)(4)(A
- Employer nonelective contributions are "other benefits." Treas. Reg. section 1.401(k)-1(e)(6).
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