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Higher Education Loan Payment and Enhanced Retirement (HELPER) Act

The Higher Education Loan Payment and Enhanced Retirement (HELPER) Act was introduced in the Senate, designed to assist Americans with student loan debt, and save for retirement. The Act would permit an annual tax-free, penalty-free withdrawal of up to $5,250 from a qualified retirement plan or IRA to pay for college or pay back student loans for a spouse or dependent. It would also allow for tax-deferred investment earmarked for tuition or loan repayment into such plans, which is an advantage over payment with after-tax dollars. Also outlined in the bill is a repeal of the cap on deducting student loan interest as one’s earnings increases. Employer-sponsored student loan and tuition payment plans would be also be tax free up to $5,250. Additionally, the bill would offer employees the choice to have employer contributions to a retirement plan qualify as Roth contributions, allowing for tax payment today, and tax -free growth and less tax burden in retirement. The premise of this bill is that workers are often not contributing to retirement plans due to repayment of student loans. The incentive to invest changes, with a chance to pay down the debt quicker, and in turn, a focus more fully on saving for retirement.

www.planadviser.com; December 4, 2019.