It took almost two years for the IRS to act on a proposal by GradFin and the Aspen Institute to allow companies to enhance their 401K plans with employees' student loan payments. This is the first step in the right direction for employers to adopt an innovative approach to helping their employees save for retirement and repay their student debt at the same time. GradFin was one of the contributors to the January 2017 Aspen Institute's "Toward a New Capitalism" report, which proposed to allow companies to allow student loan repayments to trigger a 401K matching contribution.
In August 2018, the IRS released a revenue ruling providing guidance to employers on how these plans can work. Corporations that are interested in allowing employee student loan contributions to trigger employer non-elective 401K contributions should take note of the revenue ruling. See below for more information on the IRS revenue ruling impacting 401K plans and student loan repayments.
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Our friends at the Groom Law Group provide an excellent summary of the proposed revenue ruling. Click here to review the summary.
On August 29th, the ERISA Industry Committee wrote to the IRS to broaden the ruling and provide more guidance. Click here to review the article in the Employer Benefit News.
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