Michelle Capezza Quoted in “IRS Guidance Could Help Workers with Student Debt: Group”


Michelle Capezza, Member of the Firm in the Employee Benefits and Health Care & Life Sciences practices, in the firm’s New York office, was quoted in Law360, in “IRS Guidance Could Help Workers with Student Debt: Group,” by Emily Brill. (Read the full version – subscription required.)

Following is an excerpt:

The Internal Revenue Service could clear the way for more debt-ridden workers to save for retirement by clarifying that companies won’t lose tax benefits if they make 401(k) contributions when workers make student loan payments, a trade group that advocates for corporations’ benefit interests said Tuesday.

The ERISA Industry Committee thanked the IRS for issuing a private letter ruling assuring employers that this 401(k)-contribution method is legal, but it urged the agency to go one step further. …

The ERISA Industry Committee, better known as ERIC, encouraged the IRS to issue guidance stating that workers’ 401(k) contributions won’t be taxed if the company “matches” student loan payments with 401(k) payments.

Companies run the risk of losing this tax benefit if the IRS decides the student loan-matching strategy violates 401(k) discrimination rules preventing companies from treating younger workers’ contributions differently than older workers’ …

Epstein Becker Green member Michelle Capezza urged employers considering adopting a similar program to obtain their own private letter ruling, because the May 22 ruling applies only to the company that requested it.

“While a private letter ruling provides insight, it can only be relied on with certainty by the taxpayer who requested the ruling,” Capezza said Wednesday. “This [ruling] did not address the federal tax consequences of any aspect of any issue referenced in the letter and did not address any other requirements under the code, including any nondiscrimination testing.”

Legislation amending the tax code to include “prescribed rules for integrating student loan repayment programs with qualified retirement plans” would best address the issue, Capezza said.