What is a Section 127 education plan?
A Section 127 education plan is an employer-sponsored program under IRC Section 127 that reimburses employees for education expenses up to $5,250 per year. Covered costs include tuition, fees, books, and supplies. The reimbursement is tax-free to the employee and deductible by the business. The plan must be in writing, meet nondiscrimination requirements, and cannot allow employees to choose cash instead of the education benefit. Employers use the Qualified education assistance program to attract and retain talent while reducing payroll tax costs.
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