1. What is it?
A plan that pays or reimburses employees for expenses incurred in:
Education that improves job-related skills
Non-job related educational programs
Education for children or dependents of employees
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2. Advantages
Employers benefit when employees gain skills through education
Properly structured job-related educational benefits are not taxable income to employees
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3. Disadvantages
Broad program may simply train employee for job with another employer
Educational benefits beyond certain limits are taxable as compensation to the employee
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4. Tax Implications
Individual can deduct job-related educational expenses IF education:
Maintains or improves skill required in individual’s employment
Is expressly required by individual’s employer as condition of keeping the individual's job
Other types of education are not deductible
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5. Tax Implications
Travel expenses not deductible as job-related educational expenses
Employer reimbursements to employees for job-related educational expenses are deductible by employer as compensation
Plan can be designed in such a way that it is tax- free
Copyright 2011, The National Underwriter Company

6. Tax Implications
Tax benefits exist for those incurring educational expenses:
Itemize deduction as employee business expense
Tuition and fees at eligible post-secondary education institution are deductible even if do not itemize
Hope Scholarship and Lifetime Learning tax credits
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7. Tax Implications
IRS sets specific criteria for “qualified educational assistance plans”; currently, broad range of educational reimbursements allowed on tax-free basis
Employer reimbursements for education of employee’s children or dependents are:
Taxable income to employee
Deductible as compensation by employer
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8. ERISA Requirements
Educational assistance plans may be considered welfare plans under ERISA:
Written plan
Written claims procedure
Summary plan description furnished to employees
Funded plans face additional rules
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9. How to Install a Plan Write plan
Draft and distribute Summary Plan Document in accord with ERISA requirements
No government approval required
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10. Discussion Question How is an “educational benefit trust” used?
Discussion Question: see page 411
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