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Workplace Educational Assistance Program

How to Start a Workplace Educational Assistance Program

May 12, 2021

There are many benefits you can offer your employees as their employer. A workplace education assistance program is a great one! This can play out in a number of ways, and we’ll detail all of the information you need in this post about starting a workplace education assistance program at your Phoenix company. 

What is included in a workplace educational assistance program?

Your education assistance program can look a number of ways. Some companies choose to assist with tuition, others offer grants. Here is a list of everything* that can be covered in a program like this: tuition for undergrad, or graduate-level courses, cost of books equipment, fees, and supplies.

*These expenses don’t include the cost of a course or other education involving sports, games, or hobbies, unless the education has a reasonable relationship to your business, or is required as part of a degree program. Education expenses don’t include the cost of tools or supplies (other than textbooks) your employee is allowed to keep at the end of the course. Nor do they include the cost of lodging, meals, or transportation. 

Additionally, the CARES Act states that employer educational assistance can also include certain employer payments of student loans paid after March 27, 2020, and before January 1, 2026. Visit Publication 970, Chapter 11, to ensure that the loans qualify under the CARES Act. 

How to create a workplace educational assistance program:

To make your workplace educational assistance program, you must create a separate written plan that details what assistance will be provided to your employees. Your plan must meet the following requirements to qualify:

  • The program must benefit employees who qualify under rules set up by you that don’t favor highly compensated employees; don’t consider employees excluded from your program who are covered by a collective bargaining agreement if there is evidence that educational assistance was a subject of good-faith bargaining. 
  • The program doesn’t provide more than 5% of its benefits during the year for shareholders or owners (including spouses or dependents). 
  • The program must not allow employees to opt to receive cash or other benefits that must be included in the gross income (such as a pay raise) instead of educational assistance. 
  • You must provide reasonable notice of the program to eligible employees. This can also include former employees if their employment is the reason for the coverage. 
  • The employee is a 5% owner at any time during the year or preceding year.
  • The employee was a 5% owner at any time during the year or the preceding year. 
  • The employee received more than $130,000 in pay for the preceding year. You can choose to ignore test (2) if the employee wasn’t also in the top 20% of employees when ranked by pay for the preceding year. Employee. For this exclusion, treat the following individuals as employees. 
    • A current employee. 
    • A former employee who retired left on disability or was laid off. 
    • A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. 
    • Yourself (if you’re a sole proprietor). 
    • A partner who performs services for a partnership. Exclusion from wages. You can exclude up to $5,250 of educational assistance you provide to an employee under an educational assistance program from the employee’s wages each year. Assistance over $5,250. 

More information to know about an educational assistance program

If you don’t have a workplace educational assistance program plan in place, or you provide an employee with assistance exceeding $5,250, you must include the value of these benefits as wages, unless the benefits are working condition benefits. In this case, working condition benefits may be excluded from wages. 

If you’d like any assistance as you navigate through the process of starting a workplace educational assistance program, please don’t hesitate to contact us. We are happy to help with this, and many other aspects of your business!


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