During the Great Recession, many companies saw cuts in everything from the size of their workforce to 401(k) contributions to health insurance coverage to tighten their belts. Education assistance and tuition reimbursement programs were also reduced.
Now we’re out of the recession, and with the growing cost of higher education, businesses continue to see the value in helping employees pay for additional education. In fact, a 2013 Society for Human Resource Management survey found 61 percent of employers offer a tuition assistance benefit for undergraduate pursuits, although these policies and practices vary greatly.
Many employers see the value in this type of fringe benefit as a way to boost morale, retain employees and create a skilled labor pool. According to the Internal Revenue Service, employers can also reduce the amount of employment taxes a company pays every year by taking advantage of the “educational assistance program” exclusion. Implementing a tuition reimbursement policy that satisfies the IRS’s criteria allows employers to exclude up to $5,250 of reimbursements per year from the W-2 of each employee.
To qualify, your company’s tuition reimbursement policy must be a written plan that outlines all eligibility requirements, does not favor highly compensated employees and does not provide more than 5 percent of the annual reimbursements to owners. Moreover, employees must have notice of the program but cannot have the option of taking alternative taxable benefits in lieu of a tuition reimbursement.
Let us know what you think. Take this quick survey on tuition assistance.