In October we reported on a Private Letter Ruling the IRS issued for an employer interested in offering a student loan repayment benefit through their 401(k) plan. While the ruling only applied to the plan and plan sponsor who requested it, we suspected at the time that the ruling would most likely expand interest in this type of program, resulting in legislative action in the future.
Just this past Tuesday, Senate Finance Committee Ranking Member Ron Wyden, D-Ore., introduced legislation to allow employers to make “matching” contributions to 401(k), 403(b) and SIMPLE retirement plans while employees continue to pay their student loans.
The Retirement Parity for Student Loans Act would enable employers to voluntary allow recent higher-education graduates to pay their student loans while receiving employer matching retirement plan contributions. Employers would attribute the student loan payments as salary reduction contributions made to the retirement plan. To read full details of the new legislative bill click here.
For more information on this legislation and how implementing one of the current student loan programs may benefit your organization, contact our retirement planning team.
