Page 40 - September2019_BarJournal

FEATUREBUSINESS BANKING & CORPORATE COUNSEL

about an employee’s educational debt or are typically not large consumers of health would be sufficient to trigger the company’s
personal finances. care, retirement, and insurance benefits.” 5% contribution towards the 401(k) plan,
Second, you should keep an eye on possible Be sure to check on the status of this legislation even if the employee never contributed a dime
changes at the federal level that will create if advising on a directed payment program. directly into the 401(k) plan itself.
tax advantages for direct payment programs. The PLR approving this program has
Right now there is no tax benefit to directed 401(k) Matching Programs opened the possibility for additional
payment onto an employee’s student loans. The Until recently, there was quite a bit of companies to implement matching programs
payments are considered to be W2-reportable uncertainty about the interplay between a directed at student loans. But for risk-
wages and are taxed accordingly. student loan repayment program and 401(k) adverse clients who want more approval
However, the Employer Participation in contributions. However, the IRS recently from the IRS, be sure to keep an eye on the
Repayment Act (H.R. 1043, S. 460) is currently issued a Private Letter Ruling that provided Retirement Parity for Student Loans Act
pending in Congress. The bill would expand some much-needed guidance on the subject. (S 3771), currently pending in the Senate. The
the educational benefits under Section 127 The PLR dealt with a program set up bill would formalize the Abbott Laboratories
of the Internal Revenue Code. Under that by Abbott Laboratories, a biotechnology model for other companies to copy.
chapter, companies can spend up to $5,250 company based in Illinois. After noticing that Given the complexity of legal issues
in tax-free dollars to support their employees’ their younger employees were not meeting surrounding retirement plans, corporate clients
tuition payments. The bill would expand the company’s offered 401(k) match, Abbott may want to wait for additional federal guidance,
Section 127 to allow tax-free dollars to be Laboratories modified their 401(k) plan to help either from the IRS or from Congress, before
applied to student loans in addition to tuition. their younger employees save for retirement. implementing a student loan benefit through
The bill is sponsored by both Republicans Under Abbott’s old plan, an employee their retirement plans. The Abbott Laboratories
and Democrats. Lead sponsor Senator Mark who contributed 2% of her salary to the PLR may have opened new possibilities, but the
Warren has said that the bill would “modernize” company’s 401(k) plan received a 5% matching PLR does not guarantee that another similar
the tax code to “help individuals pay down contribution from the company. Under plan would be approved.
their student loans and serve as a recruitment Abbott’s new program, an equivalent 2%
and retention tool for younger employees who payment towards an employee’s student loans Conclusion
A few decades ago, nobody thought that
employee health was the responsibility
the
Lawyers of employers or human resources
departments. And yet, today competitive
guild employers offer a suite of options to tackle
of the catholic employee emotional and physical health.
diocese of cleveland We are seeing the same transition take
The Red Mass place in student loans, with more and more

Friday, October 18, 2019 at 10:30 a.m. employers realizing that tackling financial
health means tackling student loans.
The Cathedral of St. John the Evangelist In the coming year, your corporate clients
may consider implementing a student loan HR
Luncheon 12:00 - 1:30 p.m. benefit. If they do, you’ll be ready to help.
Cleveland Marriott Downtown at Key Center
For table sponsorship, ticket information and advertising opportunities,
please go to: www.catholiccommunity.org/lawyers
Rebecca Maurer is an attorney who
focuses on housing and consumer
St. Thomas More Award law, with a particular emphasis on
student loan law. Rebecca is a
presented to graduate of the University of
Mario C. Ciano Chicago and Stanford Law School. She was
Former Managing Partner, Reminger Co., LPA previously an associate at Patterson Belknap
Webb & Tyler, a law clerk to Judge James Gwin
Designated by his peers as outstanding for personal integrity, of the Federal District Court of the Northern
professional excellence and community service.
District of Ohio, and a staff attorney at The Legal
Aid Society of Cleveland. She currently runs
The Lawyers Guild fosters spiritual growth and fellowship For information, please contact: Maurer Law LLC, a solo practice based in
within the legal community, encourages observance of Colleen Rigo Cleveland. She has been a CMBA member since
high ethical standards, and calls attention to legal and 216-696-6525 x 4080 2016. She can be reached at (216) 242-6672 or
societal issues that affect morality, justice and faith. crigo@catholiccommunity.org Rebecca@maurerlawllc.com. Follow her on
Twitter @maurerlawllc.

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