The Internal Revenue Service (IRS) issued a private letter ruling which allowed an unnamed employer (some say it\u2019s pharmaceutical giant Abbott) to make 401(k) contributions to participants who are repaying their student loans.<\/p>\n
In a nutshell, the IRS approved the 401(k) plan in question to allow plan participants to choose whether they\u2019d prefer a 5% contribution from the employer to be in the form of a 401(k) match or a student loan repayment. Participants would receive the contribution regardless of whether or not they are contributing to the retirement plan.<\/p>\n
Before you start promoting the idea of this contribution option, remember it\u2019s part of a private letter ruling specific to the issue of the employer and plan in question. I wouldn\u2019t suggest anyone adopt such an option without further guidance or seeking a private letter ruling of your own.<\/p>\n
Will this option become popular if codified into law? Perhaps, perhaps not. However, I like the idea of it because I like choices when it comes to 401(k) plans and any mechanism that can help plan participants get their financial future into place is alright by me.<\/p>\n
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