December 31, 2020 marks the last day for employers can provide employees with up to $5,250 of tax-exempt student loan repayment benefits.
When Congress passed the Coronavirus Aid, Relief and Economic Security (CARES) Act earlier this year in response to the COVID-19 pandemic, it included a temporary provision that many employers do not know about. Under this provision Employers may make tax-free contributions of up to $5,250 per employee during 2020 toward employee student debt without raising the employee’s gross taxable income. In prior years, these contributions have been subject to federal, state and local income taxes for the employee and FICA payroll taxes for both the employer and the employee. In 2021, the current preferential tax treatment is slated to disappear.
Of course it is possible that Congress will vote to extend the preferential tax treatment for student loan repayment benefits into future years but even if they do not, employers across America are finding that these types of plans give them a competitive advantage in the attraction and retention of quality employees. While many people think about student loan repayment benefits being applicable primary to the youngest members of the workforce, student loan debt increasingly impacts employees across all age demographics. Millions of parents are repaying student debt they incurred for the benefit of their children and in 2017 the Consumer Financial Protection Bureau reports that senior citizens make up the fastest growing segment of the U.S. student loan market. By helping them get out of debt faster, student loan repayment plans can benefit all of these individuals and their families.
Admin America has partnered with BenefitEd, a leading provider of customized employer-assisted student loan repayment programs and college savings programs to help our clients take advantage of this unique opportunity. We also believe agents and brokers benefit by communicating these types of opportunities to their clients and prospects. If you would like more information about implementing a student loan repayment benefit program, you can request more information here.
