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ARTICLE · 06 SEPTEMBER 2018

Innovative 401(K) Plan Benefit For Employees With Student Loan Repayments

Dickinson Wright PLLC
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Many recent college graduates find it difficult to make contributions to their employer's 401(k) plan as they have significant student loan repayments which take precedence in their budget.

United StatesConsumer Protection
Cynthia Moore
Cynthia Moore
Eric Gregory
Eric Gregory
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Many recent college graduates find it difficult to make contributions to their employer's 401(k) plan as they have significant student loan repayments which take precedence in their budget. By failing to make 401(k) deferrals, these employees may miss out on employer matching contributions as well as earnings on the deferrals and match.

The IRS has issued a recent Private Letter Ruling (PLR 201833012) that may allow these employees to receive an employer contribution that is conditioned on making a certain level of student loan repayment rather than making a deferral contribution to the plan. Under the student loan repayment ("SLR") program:

  • All employees are eligible and can voluntarily enroll in the program. An employee can opt out of the program on a prospective basis.

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