What if adding the 401(k) contribution matching program would not solely focus on retirement, but would ease other financial burdens as well? A privately held company is reported to have received the authorization from the IRS to do just that for its employees. It will allow them to shift a portion of the employer’s match to pay off student loans or health reimbursement accounts instead of solely a 401(k). This change was made possible as a result of a private letter ruling from the IRS in August, allowing employees working at this organization such discretion with respect to the employer matched funds once every year. Absent a selection by any employee, the funds shall be automatically directed to be invested in the individual 401k plan of such employee.
This ruling only applies to the one specific company that made the request with the IRS for the alteration. Some view this as a tentative test case for the IRS to see if this lenience can be applied to other circumstances as well. In the event the IRS allows this leeway to other firms, American employees might be soon able to dictate to what uses the employer match will be applied, allowing them to make use of the priorities such as debt and health for which contributions will be matched. Alluring as it may seem to have such possibilities, it however casts doubt about the welfare stagnation and retirement saving issues.
For many companies, the option of a flexible 401(k) match could enhance their appeal to prospective employees. By allowing workers to use matched funds for current financial stressors like student loans or medical bills, employers can offer more targeted assistance. This could be especially valuable for younger workers who are often managing student debt or healthcare costs and may prioritize these payments over traditional retirement savings. In fact, data from Fidelity indicates that around 22% of employees don’t fully take advantage of their employer’s 401(k) match. Many of these workers miss out on this benefit not because they lack interest, but because they can’t afford to allocate enough funds to meet the full match while managing other expenses. A flexible 401(k) match could help bridge this gap, letting employees access contributions they might otherwise leave on the table and possibly empowering them to pay down debts faster, freeing up funds for future retirement savings.
What if adding the 401(k) contribution matching program would not solely focus on retirement, but would ease other financial burdens as well? A privately held company is reported to have received the authorization from the IRS to do just that for its employees. It will allow them to shift a portion of the employer’s match to pay off student loans or health reimbursement accounts instead of solely a 401(k). This change was made possible as a result of a private letter ruling from the IRS in August, allowing employees working at this organization such discretion with respect to the employer matched funds once every year. Absent a selection by any employee, the funds shall be automatically directed to be invested in the individual 401k plan of such employee.
This ruling only applies to the one specific company that made the request with the IRS for the alteration. Some view this as a tentative test case for the IRS to see if this lenience can be applied to other circumstances as well. In the event the IRS allows this leeway to other firms, American employees might be soon able to dictate to what uses the employer match will be applied, allowing them to make use of the priorities such as debt and health for which contributions will be matched. Alluring as it may seem to have such possibilities, it however casts doubt about the welfare stagnation and retirement saving issues.
What if adding the 401(k) contribution matching program would not solely focus on retirement, but would ease other financial burdens as well? A privately held company is reported to have received the authorization from the IRS to do just that for its employees. It will allow them to shift a portion of the employer’s match to pay off student loans or health reimbursement accounts instead of solely a 401(k). This change was made possible as a result of a private letter ruling from the IRS in August, allowing employees working at this organization such discretion with respect to the employer matched funds once every year. Absent a selection by any employee, the funds shall be automatically directed to be invested in the individual 401k plan of such employee.
This ruling only applies to the one specific company that made the request with the IRS for the alteration. Some view this as a tentative test case for the IRS to see if this lenience can be applied to other circumstances as well. In the event the IRS allows this leeway to other firms, American employees might be soon able to dictate to what uses the employer match will be applied, allowing them to make use of the priorities such as debt and health for which contributions will be matched. Alluring as it may seem to have such possibilities, it however casts doubt about the welfare stagnation and retirement saving issues.
