Congress Extends Critical Legislation Enabling Employers to Enhance Financial Wellness Programs
Tax-free status of employer-sponsored student loan payments preserved
Gradifi by E*TRADE, a student loan payment benefit administrator, applauded Congress’ decision to extend critical legislation that preserves for five years the tax-free status of employer-sponsored student loan repayment programs.
HR Technology News: HR Should Focus More On Talent Experience To Engage And Retain Employees
“Since this legislation was enacted interest in and engagement with workplace student loan repayment programs has grown meaningfully, and we’ve seen that the tax treatment has had the positive impact it intended”
Under this provision, employers can continue to make tax-free contributions of up to $5,250 per employee annually toward eligible education expenses, like tuition or student loan assistance, without raising the employee’s gross taxable income.
HR Technology News: Venterra Realty Partners With DecisionWise For Their 2020 Leadership Survey
“Since this legislation was enacted interest in and engagement with workplace student loan repayment programs has grown meaningfully, and we’ve seen that the tax treatment has had the positive impact it intended,” said Kate Winget, Managing Director, Head of Participant Engagement and Experience for Morgan Stanley at Work, which includes Gradifi by E*TRADE. “It is a huge win that this legislation has been extended, but our work is far from over. As the adoption of this benefit grows, we must continue our push to make this important tax treatment permanent.”
Prior to the tax-free status of employer-sponsored student loan repayments, both employees and employers faced tax obligations, with the employee paying tax on the employer contribution. This law removes barriers for companies to enhance their employee financial wellness, recruitment, and retention offerings with pre-tax student loan repayment, and helps empower employees to pay down their debt balances faster.