Nowadays, it seems nearly everyone has student loan debt. The rising cost of university tuition has left many employed Americans in serious debt. As a Tennessee employer, you have a duty to your company and to your employees. To retain employees, they must feel valued and often benefits are a part of this package. How does student debt figure into employee benefits? It all comes down to the 401k plan.
In 2018, the IRS ruled that companies could contribute to an employee’s retirement account based on the employee’s student loan payments. According to Forbes, some Millennials have so much student loan debt that they cannot contribute to the workplace’s 401k plan. This law provides employers with the opportunity to add money on behalf of the employee based on student loan payments.
Student loans take up 1.4 trillion dollars in the United States. If employers have access to this type of money, it could help revitalize the economy. Approximately half of all younger workers opt out of the retirement plan. In most cases, this is not because the younger workers do not see the importance of it. In fact, many would probably rather feed into the 401k plan. With crushing student loan debt, many cannot find a place in their budget for it. However, with this plan, employees can have a 401k benefit despite having student loans. It takes a large percentage of the workforce and gives them a fair shot to pay into the plan.
The information provided here is to give employers an idea of the 401k options available and is in no way legal advice.