By Marlene Y. Satter
It’s no secret that student loan
debt is weighing heavily on people trying to save for retirement — and now a system that rewards workers for making those student loan payments is getting broader exposure.
Prudential Retirement has added Student Loan Genius’ 401(k) contribution feature to its retirement plan offerings. Prudential is a backer, along with John Hancock, of Student Loan Genuis, which allows companies to reward employees for making student loan payments by providing a pretax contribution into their retirement accounts.
The new partnership between Prudential Retirement and Student Loan Genius makes the former the first retirement plan recordkeeper to offer the option.
According to Prudential, if an employer elects to add this feature to their plan, employees who make student loan payments processed through Student Loan Genius receive a pretax contribution to their retirement account from their employer based on that student loan payment, whether or not they contribute to their 401(k) plan or receive any matching
The contribution, paid as a flat dollar amount, or a percentage of the student loan payment or of the employee’s compensation, can be offered annually, monthly, or for each payroll period. For example, an employer could offer a $75 monthly contribution to an employee who pays a $400 loan repayment each month.
Student loan debt is weighing so much on workers that many are having to put off other important life goals — such as buying a home or even getting married — until that debt is paid down. The notion of employers helping employees pay off student loan debt as an employee benefit began to catch on last year.
And with employees certainly stalling on contributing to a retirement plan till they’ve wrangled today’s student loan debt
down to a manageable size, the collaboration between a retirement plan provider and a system like that of Student Loan Genius looks to be a practical means of helping employees think about tomorrow even while they’re still figuring out today.
Originally posted on BenefitsPro.com