Implementing Student Loan Repayment Benefit

[Flyboyjohn]

Employer wants to implement a student loan repayment benefit, often erroneously referred to as a "match" but we know is an employer non-elective contribution.

Question is how much of the "program" needs to be addressed in the plan document vs. a much less formal payroll practice or policy.

It would seem that if the plan document already provides (or is amended to provide) that each participant is in a separate non-elective allocation group, and the eligibility and vesting provisions conform to the employer's intent that there would be no requirement to have anything further in the plan document.

When an employer determines in it's sole discretion how much non-elective contribution to allocate to each participant there's no requirement that the basis for the allocation be incorporated in the plan document. If an employer wants to reward certain employee behaviors by non-elective contributions ("you'll get $1,000 if you increase sales by 5%" or "you'll get $1,000 if you have no unexcused absences this year") those policies can be communicated informally and do not require plan amendments so it would seem that a student loan repayment benefit could likewise be crafted outside of the plan document.

Any disagreement?

  

 

 

 

[Larry Starr]

1 hour ago, Flyboyjohn said:

Employer wants to implement a student loan repayment benefit, often erroneously referred to as a "match" but we know is an employer non-elective contribution.

Question is how much of the "program" needs to be addressed in the plan document vs. a much less formal payroll practice or policy.

It would seem that if the plan document already provides (or is amended to provide) that each participant is in a separate non-elective allocation group, and the eligibility and vesting provisions conform to the employer's intent that there would be no requirement to have anything further in the plan document.

When an employer determines in it's sole discretion how much non-elective contribution to allocate to each participant there's no requirement that the basis for the allocation be incorporated in the plan document. If an employer wants to reward certain employee behaviors by non-elective contributions ("you'll get $1,000 if you increase sales by 5%" or "you'll get $1,000 if you have no unexcused absences this year") those policies can be communicated informally and do not require plan amendments so it would seem that a student loan repayment benefit could likewise be crafted outside of the plan document.

Any disagreement?

  

 

 

 

Yes, complete.  You can create the policy outside of the plan. It only provides benefits to NHCEs.  And you do -11g amendments (which are individual participants and amounts) by 8 1/2 months to provide the additional contribution.  No document changes are needed.  But besides that, the whole idea is just stupid for every small business I can think of, but that's another issues.