The Railsback Group, P.C.

Your business can set up a Sec. 127 educational assistance plan to give each eligible employee up to $5,250 a year, free from federal income tax and payroll tax. The plan must meet certain requirements. For example, it must be in writing, for the exclusive benefit of employees. The plan can’t discriminate in favor of highly compensated employees or their dependents who are employees. Also, you can’t offer employees the choice between tax-free educational assistance and other taxable compensation, like wages. You can provide the benefit to your own child if he or she is 21 or older, an employee of the business, not your dependent and not a more-than-5% owner. Contact us to learn more.