Plan sponsors are unlikely to receive general guidance from the IRS on making 401(k) employer contributions to accounts of participants repaying student loans, according to speakers at the Plan Sponsor Council of America national conference in Tampa, Fla.
"The IRS as this point isn't jumping to go issue a revenue ruling," said David Levine, a principal of Groom Law Group, during a session on student loan developments for 401(k) plans.
Mr. Levine said the PSCA and other trade groups met with officials of the IRS and the Treasury Department to discuss expanding the private letter ruling the IRS issued to Abbot Laboratories last summer, allowing it to contribute to the 401(k) accounts of employees paying down student debt.
"The outcome of the meeting was not as optimistic as one might hope for," Mr. Levine said.
He and fellow speaker Jeffrey Holdvogt, a partner with law firm McDermott Will & Emery, said that even though the IRS does not have the resources to respond to additional requests for private letter rulings — as they suspect the IRS is already receiving from plan sponsors — it nevertheless is reluctant to move forward with official guidance.
"The IRS is a little bit between a rock and a hard place," Mr. Holdvogt said. Though the agency doesn't want to be in a position to issue more private letter rulings, it is also "very wary of some of the unintended consequences," he said.
Mr. Holdvogt added that the IRS is also "wary of issuing some kind of ruling and then having it be trumped by legislation."
