What Employers Should Know About the New FAQs on Educational Assistance Plans
The IRS recently released updated FAQs addressing educational assistance programs under Internal Revenue Code Section 127. While much of the guidance reflects existing rules, the updates incorporate recent legislative changes and provide helpful clarifications for employers that offer or are considering offering education benefits. Refresher: Section 127 Basics Still Apply Section 127 allows employers to provide employees with tax‑free educational assistance of up to $5,250 per year, indexed for inflation after 2026. That amount continues to apply to both traditional tuition assistance and qualified student loan repayment benefits. To qualify, the program must: Be a written plan for the exclusive benefit of employees (click here for our prior post on the document requirement); Avoid discrimination in favor of highly compensated employees; and Be communicated to eligible employees. Student Loan Repayment: Continued Flexibility — With Guardrails The FAQs reiterate that educational ass...