Employers take different viewpoints when addressing employees’ requests for help in managing personal financial obligations.
Abbott Laboratories, for example, received approval from the Internal Revenue Service (IRS) in a Private Letter Ruling (PLR) on the question of an employer’s use of a 401(k) plan as an incentive for employees to reduce their student loan debt. In this case, the employee pays down student debt without missing the “free money” from the employer’s contribution.
The company applied for the student loan benefit program PLR in August 2017 and went up and back with the IRS a number of times in 2018. The PLR outlines how the student loan repayments (SLRs) work and explains the SLR nonelective contribution employees can receive for making the SLR.
This creative and uncommon 401(k) plan provision could help reduce anxiety among workers who are concerned about personal financial obligations to the point of distraction, making them less productive. And it may also help staunch the loss of talent to competitors.
To learn more about creative plan provisions to ensure employees’ financial wellness, read Charles Clark’s article “Helping employees to financial wellness: An innovative approach.”