The IRS has issued a private letter ruling approving an employer program that allows employees to allocate employer contributions across multiple benefits, including a 401(k) plan, retiree HRA, educational assistance for student loans, or an HSA. This ruling provides insights into how the IRS might handle similar employer programs, even though it doesn’t set a general precedent. Click here for article.
Employer Contribution Allocation: Employees can direct employer contributions to a 401(k), retiree HRA, educational assistance, or HSA.
Irrevocable Annual Election: Employees make an irrevocable choice during open enrollment, with contributions made by March 15 of the next year.
Limits on Other Benefits: Those choosing HSA or educational assistance contributions can’t access related benefits until after March 15.
No Cash Payouts: Employer contributions cannot be received as cash or any taxable benefit to ensure compliance with tax laws.
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