Hello, my employer has a USC Section 127 educational assistance program. The first part of the program pays up to $3,000 per year for tuition assistance. In this policy, they state that any assistance over $3,000 will be taxed.
The second part of the program is for loan repayment. They give $20,000 split over 4 years in yearly payments of $2,500, $5,000, $5,000, and $7,500. These are paid directly to the loan servicer. In this policy, they also state that any assistance over $3,000 will be taxed.
When I asked why they are not using the federal maximum exclusion of $5,250 (instead of the current $3,000) I got this response:
"The Consolidated Appropriations Act passed at the end of 2020, moved employer-provided student loan repayment plans under the same education assistance tax law as tuition reimbursement. Since the non-taxable tuition reimbursement benefit is limited to $3,000 per year, that in turn becomes the non-taxable limit on the loan repayment benefit."
When I look a the relevant laws I don't see why they can't use the federal maximum exclusion of $5,250 while maintaining the same benefit payments for each program.
Am I missing something?
Thanks
