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Section 127 Education Assistance Plan


Guest ebailey
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Guest ebailey

Our plan is included (the one page it consists of) in our employee handbook. Does the Plan need to be in an actual separate document or does the fact that it has a separate section in the plan called Education Assistance cover this requirement from reg. 1.127-2(b)? Any insight would be appreciated.

thanks

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You wrote that "it has a separate section in the plan..". In what plan does it have a separate section ?

Or, are you confusing the plan with the handbook ?

As an aside, don't you have separate written plan documents for each item in your employee benefits program? So why would it seem strange to also have one for this particular benefit ?

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

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Guest ebailey

Yes I was confusing plan/handbook. We cannot find a separate "plan" for the education assistance plan other than the one page that refers to it in the Employee Handbook. Does 127 require this separate plan? You are correct we have separate plans for 401(k) etc but have a very short educational assistance plan which is entirely in the employee handbook.

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ebailey: Obviously you know what the regulation says. I doubt there is any more guidance than that. This is one of those questions that should not have to be asked. If the client is going to the trouble to take advantage of the special tax attributes of a section 127 plan, why tempt fate? Advise the client to have a separate plan document drafted pronto.

That's not to say that it should fall on its sword and file corrected 941s, issue corrected W-2s and pay back employment taxes. If the IRS came knocking I would make the best arguments possible that the handbook was sufficient, but going forward the client should have a separate plan document.

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