For Immediate Release
Washington, DC – The ERISA Industry Committee (ERIC) today sent the Internal Revenue Service (IRS) a letter regarding retirement savings programs for individuals repaying student loans.
In the letter, ERIC praised the IRS for issuing Private Letter Ruling-131066-17 (PLR), which permits the 401(k) plan sponsor that requested the PLR to contribute to the company’s 401(k) plan on behalf of plan participants who pay down student loan debt but do not necessarily contribute to the company’s 401(k) plan. ERIC asked the IRS to issue a revenue ruling that would broaden the reach of this guidance to enable all sponsors of 401(k) plans to make similar contributions.
Employers recognize the burden that student loan debt can have on their workers’ ability to save for retirement and would like to help these workers in preparing for a secure retirement. While we believe current law allows employers to make contributions to their retirement plans on behalf of workers who repay student loan debt, the IRS has yet to clearly articulate that such contributions will not affect the tax-qualified status of an employer’s retirement plan.
“The recently issued PLR is a significant step in right direction, but ERIC believes that more employers would be encouraged to implement retirement savings programs to assist individuals who are repaying student loans, similar to the one described in the PLR if the IRS would issue a revenue ruling or other guidance of general applicability on this issue,” said Will Hansen, Senior Vice President of Retirement and Compensation Policy, ERIC. “ERIC hopes the IRS will work with us to develop such a revenue ruling to make sure that it has the maximum impact in helping workers strapped with student loan debt save for their retirement.”
Click here to read ERIC’s letter.