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Employee Educational Assistance Programs

Providing Tax-Friendly Educational Assistance

Employer-provided educational assistance is often overlooked. Employee Benefits Law Group helps employers maximize tax benefits and follows the correct procedures for all applicable Internal Revenue Code requirements regarding educational assistance.

We help employers provide educational assistance while limiting tax liability.

We advise employers and their other advisors on all aspects of educational assistance programs, including program design, program documents, nondiscrimination requirements, reporting and the Code's limits on benefits. Employers can generally provide educational assistance on a tax-free basis in two different ways:

  • If the educational assistance is job-related education, the benefit can be excluded from an employee's gross income as a "working condition fringe benefit" under Code section 132 if it meets certain criteria, such as maintaining or improving the employee's skills for the job or meeting requirements.
  • Educational assistance that is not job-related can be excluded from an employee's gross income, within certain limitations imposed by the Code. It requires that the program meet a number of requirements, including that there must be a separate written plan and it must be nondiscriminatory in favor of highly compensated employees.