Data and Research February 1, 2016

Job Seekers Want Student Loan Benefit

Help with student loans joins retirement, health and vacation benefits as a priority.
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Today’s job seekers are not just interested in whether a prospective employer offers a retirement and health plan, along with a paid vacation; they are looking for help from an employer paying off their student loans.

Beyond, a job placement website, found in a survey of 5,000 job seekers that 89% with debt believe companies should offer student loan repayment as part of the benefits package, and 10% ranked student loan repayment higher than a paid vacation policy as the “most important” benefit. Sixty-nine percent said they would “absolutely” be more willing to accept a job offer if it included a student loan repayment benefit.
 
According to the credit bureau Experian, the nationwide student loan debt reached an all-time record of $1.2 trillion in 2014. This data was supported by the Beyond survey, which revealed that 29% of job seekers owe more than $35,000 in student loans, and 20% say that student loans impact their ability to pay living expenses.
 
“401(k) matching doesn’t mean much if you are spending all of your money paying off student loan debt,” says Joe Weinlick, senior vice president of marketing at Beyond. “The hiring landscape is not as bleak as it was, and in a highly competitive market, companies offering innovative benefits such as student loan reimbursement may have a leg up on the competition. In addition, student loan reimbursement could help retain Millennials, who have been famously less loyal and more likely to switch jobs than previous generations.”
 
According to the survey, 81% of survey respondents said they would be more likely to stay with a company if it meant losing student loan repayment.
 
As to how they would like to receive student loan repayments, answers varied widely, with 58% preferring it in each paycheck, 29% favoring an amount at the end of each year, and 13% wanting a lump-sum payment after a certain work anniversary.
 
LIMRA recently issued a report saying that student loans could cost workers $325,000 in lost retirement savings over the course of a career. In addition, NerdWallet pointed to student loans as one of the factors, along with rising rents and conservative investing tendencies, that could cause many Millennials to retire as late as 75.
 
Natixis Global Asset Management recently announced a new benefit to assist employees with the repayment of their student loan debt.
Compliance February 1, 2016

IRS Provides Guidance About Mid-Year Safe Harbor Plan Changes

The guidance includes prohibited changes to a safe harbor retirement plan.
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The Internal Revenue Service (IRS) issued Notice 2016-16 which provides guidance about mid-year changes to a safe harbor plan under Sections 401(k) and 401(m) of the Internal Revenue Code. 

The notice provides that a mid-year change either to a safe harbor plan or to a plan’s safe harbor notice does not violate the safe harbor rules merely because it is a mid-year change, provided that applicable notice and election opportunity conditions are satisfied and the mid-year change is not a prohibited change, as described in the notice. 

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In addition, the notice requests comments about additional guidance that may be needed, in particular with respect to mid-year changes to safe harbor plans in cases in which a plan sponsor is involved in a merger or acquisition.

For purposes of this notice, a “mid-year change” is (i) a change that is first effective during a plan year, but not effective as of the beginning of the plan year, or (ii) a change that is effective as of the beginning of the plan year, but adopted after the beginning of the plan year. Also, for purposes of this notice, “required safe harbor notice content” refers to the information that is required by the safe harbor plan regulations to be provided in a plan’s safe harbor notice.  

The notice sets out special conditions that must be satisfied for a mid-year change that alters the plan’s required safe harbor notice content. The IRS notes that not every change alters information required to be provided in a plan’s safe harbor notice (for example, information about a plan’s entry date). Similarly, information required to be included in a plan’s safe harbor notice can change mid-year even if no change is made to the safe harbor plan (for example, a change in contact information).

Text of the notice is at https://www.irs.gov/pub/irs-drop/n-16-16.pdf.

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