Employers recognize the need for student loan repayment
assistance as part of their employee benefits package, a survey of 400 managers
by IonTuition found.
Ninety percent think student loans are creating stress for their employees, and
80% think student loans are making their employees less productive. More than
half think that their employees view their benefits as critical—more so than
company culture, commute and reputation—when evaluating a job offer.
Eighty-five percent think their employees would take advantage of a student
loan assistance benefit.
Eighty percent think that if they had such a benefit, it could help them
recruit talent, and 70% think it would improve retention and morale.
Seventy-five percent think that employees with student loans contribute less to
their 401(k), and 85% think their employees would like payments to their
student loans to be automatically deducted from their payroll.
“Student loan debt connects employers and employees in a very meaningful
fashion,” says Balaji Rajan, CEO of IonTuition. “Just like health care and
retirement plans, student debt repayment assistance is applicable to more
employees than tuition reimbursement or 401(k) plans.”
The proposed regulations include a withdrawal of a specific provision of the notice of proposed
rulemaking published in December 2008
regarding the calculation of amounts includible in income under Section
409A(a)(1) and replaces that provision with revised proposed
regulations.
The Internal Revenue Service (IRS)
has proposed regulations that would clarify or modify certain specific
provisions of the final regulations under section 409A.
This
proposal also withdraws a specific provision of the notice of proposed
rulemaking published in the Federal Register on December 8, 2008,
regarding the calculation of amounts includible in income under Section
409A(a)(1) and replaces that provision with revised proposed
regulations.
The proposed regulations clarify
that the rules under Section 409A apply to nonqualified deferred
compensation (NQDC) plans separately and in addition to the rules under
Section 457A. They also clarify that a stock right that does not
otherwise provide for a deferral of compensation will not be treated as
providing for a deferral of compensation solely because the amount
payable under the stock right upon an involuntary separation from
service for cause, or the occurrence of a condition within the service
provider’s control, is based on a measure that is less than fair market
value.
Other clarifications include:
Certain
separation pay plans that do not provide for a deferral of compensation
may apply to a service provider who had no compensation from the service
recipient during the year preceding the year in which a separation from
service occurs.
A stock purchase treated as a deemed asset sale
under Section 338 is not a sale or other disposition of assets for
purposes of determining whether a service provider has a separation from
service.
A service provider who ceases providing services as an
employee and begins providing services as an independent contractor is
treated as having a separation from service if, at the time of the
change in employment status, the level of services reasonably
anticipated to be provided after the change would result in a separation
from service under the rules applicable to employees.
The rules
for transaction-based compensation apply to stock rights that do not
provide for a deferral of compensation and statutory stock options.
Clarify
the provision permitting payments upon the termination and liquidation
of a plan in connection with bankruptcy and other rules permitting
payments in connection with the termination and liquidation of a plan.
A service provider can be an entity as well as an individual.
NEXT: Modifications and other provisions
The proposed regulations clarify and modify Section 1.409A–
4(a)(1)(ii)(B) of the proposed income inclusion regulations regarding
the treatment of deferred amounts subject to a substantial risk of
forfeiture for purposes of calculating the amount includible in income
under section 409A(a)(1).
They also include modifications of the
short-term deferral rule to permit a delay in payments to avoid
violating Federal securities laws or other applicable law; the
definition of the term “eligible issuer of service recipient stock” to
provide that it includes a corporation (or other entity) for which a
person is reasonably expected to begin, and actually begins, providing
services within 12 months after the grant date of a stock right; the
rules regarding recurring part-year compensation; the rules applicable
to amounts payable following death; and the conflict of interest
exception to the prohibition on the acceleration of payments to permit
the payment of all types of deferred compensation (and not only certain
types of foreign earned income) to comply with bona fide foreign ethics
or conflicts of interest laws.
The
proposed regulations provide that a plan under which a service provider
has a right to payment or reimbursement of reasonable attorneys’ fees
and other expenses incurred to pursue a bona fide legal claim against
the service recipient with respect to the service relationship does not
provide for a deferral of compensation.
It provides a rule that
is generally applicable to determine when a “payment” has been made for
purposes of section 409A. The addition of the death, disability, or
unforeseeable emergency of a beneficiary who has become entitled to a
payment due to a service provider’s death as a potentially earlier or
intervening payment event will not violate the prohibition on the
acceleration of payments. In addition, a plan may accelerate the time of
payment to comply with Federal debt collection laws.
The IRS
says taxpayers may rely on these proposed regulations immediately, but
the agency is accepting comments until September 20.