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How We Help Employees Pay Down Student Loans and Save for Retirement at the Same Time

Source: https://hbr.org/2018/11/how-we-help-employees-pay-down-student-loans-and-save-for-retirement-at-the-same-time - Nov 28, 2018

A small percentage of U.S. companies — including PwC, Fidelity, and Aetna — have stepped up to help their employees cope with the education loans weighing them down by offering them cash to help them reduce their debts. While I applaud them, one downside of their approach is simply giving their workers cash raises their income taxes, diminishing the impact of their efforts.

To address this dilemma, Abbott, where I lead Human Resources, took a different approach. We introduced a program last August to contribute 5% of pay to a tax-deferred 401(k) plan for full- and part-time workers who direct at least 2% of their pay toward paying down their student loans. The Internal Revenue Service reviewed — and ruled favorably on — the 401(k) plan structure we came up with to make this possible.

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Category: General Business