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awilde

Nov 18 2005, 03:29 AM

Our firm would like to provide tuition assistance to one of our employees. He is currently in an MBA program, and we are willing to reimburse his tuition up to $5,250/year:

1. Do we need a formal tuition reimbursement policy/procedure?

2. Can we just accomodate this one individual or do we have to offer this benefit to all employees? Can we discriminate based on what or where an individual is studying? For example, none of our other staff is in an MBA program.

Thanks in advance for any insight...

JanetM

Nov 18 2005, 10:01 AM

Am not an expert on this so I will offer you an alternative idea. How about a cash bonus, you could even gross it up if necessary.

gdburns

Nov 22 2005, 01:34 AM

I am also not an expert on this either.

It seems to me that having a formal policy on this issue would be an overkill and probably cost too much. So the bonus idea from JanetM seems a good idea. Nothing says that bonuses have to be equal to all employees. A bonus for a particular achievement does not have to be given to anyone else who has not accomplished the same thing. In this case I see no problem rewarding this single employee for getting the MBA. Nothing else needs to be said about where etc and you do not have to do it for a subsequent employee.

Remember to gross up to cover the taxes and FICA.

Harry O

Nov 24 2005, 09:23 AM

If the MBA qualifies as job-related education (that is, maintains or improves skills required for current job), reimbursement can be made without a written plan and no taxes are payable by the employee or employer. This is because the payment will qualify as a nontaxable working condition fringe benefit under section 132. WARNING: MBAs are notoriously tricky to qualify as job-related. If the employee is currently in a management/finance/administrative position, your chances are better. If the employee is an "individual contributor" or non-managment staff employee, it is hard to justify how the MBA enhances skills required by his or her CURRENT job.

The bottom line is that if the MBA is job-related, no need for plan document and no need for tax gross up.

fender5150

Jun 1 2009, 02:20 PM

This is from pub 15-b.

QUOTE

Educational assistance program. An educational assistance program is a separate written plan that provides educational assistance only to your employees. The program qualifies only if all of the following tests are met.
The program benefits employees who qualify under rules set up by you that do not favor highly compensated employees. To determine whether your program meets this test, do not 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 does not provide more than 5% of its benefits during the year for shareholders or owners. A shareholder or owner is someone who owns (on any day of the year) more than 5% of the stock or of the capital or profits interest of your business.

The program does not allow employees to choose to receive cash or other benefits that must be included in gross income instead of educational assistance.

You give reasonable notice of the program to eligible employees.

I'm not sure if chilren of shareholders are included in the definition of shareholders. My guess is they ARE.

To keep it simple, just give the one employee a bonus. the bonus wouldn't even have to be limited to the $5,250.

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