Plan Document to Reimburse $5,250 Tax-Free Annually

The Section 127 Student Loan Repayment and Educational Assistance Program allows employers to reimburse employees up to $5,250 per year for tuition, books, supplies, fees, and student loan repayment.

The Coronavirus Aid Relief and Economic Security Act (the “CARES Act”) provided a way for employers to help repay employee student loans, with tax-free benefits for both the employer and employee.

Section 127 Student Loan Repayment

The most recent COVID-19 relief bill, attached to the Consolidated Appropriations Act, 2021, approved on December 21, 2020, extended the tax-free status of employer payments toward employee student loans through 2025.

Core Documents provides employers with everything they need to establish an IRS- and DOL-compliant Section 127 Student Loan Repayment and Educational Assistance Program plan document in PDF format for as low as $99. This cost reflects a one-time setup fee, not an annual charge.

Here are the areas the employer can control when setting up a Section 127 Student Loan Repayment and Educational Assistance Program plan document:

• That the course of instruction be relevant to the business of the employer;

• That an employee remains with the employer for a stated length of time afterward; and,

• That the employee completes the course with a particular grade level or higher.

• Is for just ongoing Educational Assistance for tuition, books, supplies, fees, and similar expenses.

• Does the EAP also cover existing Student Loan Relief per the 2020 Cares Act.

Within the following rules, a company may choose to reimburse any or all eligible expenses:

• An EAP can reimburse employees for tuition, books, supplies, fees, and similar expenses.

• EAPs may not reimburse for travel, lodging, meals, or any item that may be retained by the employee after the course is finished.

• However, the course may not cover sports, hobbies, or games.

Section 127 Student Loan Repayment and Educational Assistance Program webpage:  https://www.coredocuments.com/core127eap/

See an article regarding the 2020 Cares Act Student Loan Relief:  https://www.coredocuments.com/2020-cares-act-employers-repay-employee-student-loans-up-to-5250-tax-free/.

Section 127 Student Loan Repayment and Educational Assistance Program brochure and information needed to establish a plan document: https://www.coredocuments.com/wp-content/uploads/2020/10/Core-Sec127-EAP-Plan-Document-Forms-2021.pdf.

Or, use the online order form:   https://www.coredocuments.com/wp-content/uploads/2020/11/Core-Section-127-EAP-plan-document-order-form_compressed.pdf.

Core Documents has been providing employers with IRS, DOL, and ACA-compliant plan documents to over 70,000+ satisfied plan document clients since 1997.

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