The Travelers Cos., St. Paul, Minn., will make matching contributions to the 401(k) accounts of employees repaying student loans, the insurance company announced in a news release.
Under the new program, Travelers will match whatever payments employees are making toward their student debt, up to 5% of their salary or a maximum of $6,500 a year. Employees do not need to contribute to their 401(k) plans to be eligible for the new perk.
"Many of our colleagues all too often struggle to save for retirement because student loans weigh so heavily on their finances," said Alan D. Schnitzer, chairman and CEO, in the news release. "Investing in their education shouldn't stop our employees from investing in their future."
The company's $6,500 annual maximum contribution takes into account both employee student loan repayments and 401(k) contributions, if any.
The new benefit, which will begin in January 2020, will be available to all U.S. employees who are paying down student loans. While Travelers does not offer student loan repayment assistance to employees through direct payments to loan providers, it offers tools that can help employees access refinancing options and learn about debt management strategies, a company spokesman said.
Travelers did not know how many employees are expected to take advantage of the new benefit but noted in the release that it hires thousands of employees each year under the age of 35, an age cohort likely to hold a high level of student debt.
The company estimates that employees who participate in the new Travelers Paying It Forward Savings Program could "accumulate tens of thousands of dollars in their 401(k) accounts over a decade, which could be worth hundreds of thousands of dollars in retirement."
The new benefit is similar to that introduced by Abbott Laboratories, Abbott Park, Ill., in the summer. Abbott gives employees who are contributing at least 2% of their pay toward student loans an amount equivalent to the company's 5% match deposited into their 401(k) accounts. Like Travelers, it does not require participants to make any 401(k) contributions of their own to receive the company match.
Abbott received a private letter ruling from the IRS to structure its program the way it did, an Abbott spokeswoman said. Travelers did not receive such an IRS ruling, according to the company.
At the end of 2017, Travelers had $6.5 billion in 401(k) plan assets, while Abbott had $8 billion, according to their Form 5500 filings.
