Over­all

Bloomberg Businessweek (Europe) - - FOCUS ON/ RETIREMENT - −Mar­garet Collins and Ben Stev­er­man

sync a com­pany’s 401(k) pro­gram with col­lege loan bills. In March, Stu­dent Loan Ge­nius rolled out a fea­ture al­low­ing em­ploy­ees who make a monthly stu­dent loan pay­ment to get a match­ing em­ployer con­tri­bu­tion to their 401(k). “Not only are we help­ing the stu­dent loan prob­lem, we’re help­ing peo­ple save as well,” says Aguilar.

The money goes fur­ther since 401(k) con­tri­bu­tions aren’t taxed un­til the funds are with­drawn, whereas matches for the em­ployee’s monthly loan pay­ment are taxed up­front. Ul­ti­mately, it’s up to em­ploy­ers to de­cide how to struc­ture the ben­e­fit—to en­cour­age re­tire­ment plan­ning, or stu­dent loan pay­ments, or both. Aguilar is also sup­port­ing a bill, spon­sored by both Repub­li­cans and Democrats in Congress, that would al­low em­ployer matches to stu­dent loan pay­ments to be tax-ex­empt.

Com­pa­nies in Stu­dent Loan Ge­nius’s 401(k) ben­e­fit pro­gram will need to nav­i­gate the knotty rules the fed­eral govern­ment im­poses on re­tire­ment plans, says Mar­cia Wag­ner, man­ag­ing di­rec­tor of the Wag­ner Law Group in Bos­ton. So-called nondis­crim­i­na­tion tests pre­vent highly paid em­ploy­ees from get­ting too much ex­tra ben­e­fit out of 401(k) plans com­pared with lower-paid work­ers. Stu­dent Loan Ge­nius says such rules aren’t a prob­lem, be­cause those with stu­dent loans tend to be closer to the bot­tom of the pay scale.

Ali­cia Mun­nell, a Bos­ton Col­lege pro­fes­sor who’s the di­rec­tor of the Cen­ter for Re­tire­ment Re­search, says link­ing stu­dent loan pay­ments and 401(k) con­tri­bu­tions is a “nice idea” whose ap­peal may be lim­ited. “If ev­ery com­pany of­fered this type of ben­e­fit, it would help debt-laden col­lege grad­u­ates get an ear­lier start on re­tire­ment sav­ing,” she says. “But ev­ery com­pany won’t.” The best way to help young peo­ple save for re­tire­ment would be to im­prove how 401(k) plans are de­signed, she says, by adding fea­tures (which work­ers can opt out of ) that au­to­mat­i­cally en­roll them and raise the con­tri­bu­tion rate over time.

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