It’s not often that you hear about an employer filing a motion with the IRS to provide new financial benefits to their employees. Tax codes pertaining to employee benefits were meant to protect employees from being mistreated. But sometimes, regulations that appear benevolent in theory can reveal unexpected consequences in practice, and an amendment becomes necessary.
Recently, in a private ruling, the IRS granted Abbott Laboratories, a national healthcare company, the option to tie employees’ student loan contributions to their retirement plans. Previously, the “contingent benefit” provision prevented employers from providing employee benefits that were contingent upon employees making retirement contributions. This prevented employers from connecting something like an employee’s payments toward student loan debt to the company’s 401(k) retirement matching plans.
Low retirement contribution is a growing trend among millennials; and, so is growing student loan debt. That’s why employees will often opt to make student loan payments rather than contribute to their 401(k) plan. This new ruling could help employees overcome both challenges.
Before long, other companies are likely to jump on board and begin offering employee student loan benefits attached to their retirement plans. Already, many employers have adopted other ways to help employees with student loan debt. They are partnering with student loan refinancing companies like Laurel Road to provide refinancing options that will help their employees save.
Student loan benefits like these can help to enhance the lives of employees and improve their satisfaction of their employer and their jobs. Learn more about Laurel Road student loan refinancing partnerships here.
The post provided is for informational purposes only and not tax, legal, or financial advice and should not be relied upon for those purposes.