Don’t Just Succeed. Thrive with Flexible Matching
An Innovative New Student Loan Debt Benefit for Your Employees
FOCUS4Financial is now offering access to Thrive, an innovative new employee benefit student loan solution to employers for their employees. By utilizing an existing benefit, the employers can deploy a meaningful student loan debt benefit that is also budget neutral.
The Thrive Flexible Matching student loan debt solution is believed to be the first program of its kind nationally that integrates the employee’s contribution and the employer match from their company’s 401(k) or 403(b) plan, enabling eligible employees to effectively re-allocate a portion of their retirement plan contribution and company match directly toward student loan debt.
How it Works
Helping to Lower Student Loans Payments. It’s that Simple.
Employee Makes Their Election
An employee allocates their matching dollars in one of three ways: a traditional retirement plan, student loan repayment or denoting a certain percentage toward both. After the employee chooses their allocation percentages, they register their student loans.
Thrive Processes the Allocated Amounts
After an employee enrolls, Thrive determines the amount for payroll deduction and employer match, ensuring elections follow benefits plan. The employer withholds the deduction and applies matching funds in one lump sum. Thrive processes and applies the payment to each employee’s student loan.
Available Amount Is Same as Current Matching Dollars
The total amount available for the employer match is governed by the company’s existing retirement plan. There’s no increase to an employer in terms of the dollars currently allocated toward matching benefits. For example: if the current match is 1:1 up to 5%, it will still only match the dollar amount of that percentage regardless of how the employee chooses to distribute the funds.
With Thrive, your employees have complete control of how they allocate their employee-matched funds.
Do I need to amend my Retirement Plan Summary Document?
No. Student loan repayment is separate from your Retirement Plan. You shouldn’t need to update or modify your Retirement Summary Plan Document (SPD).
Does Thrive become part of my Retirement Plan?
No. They are separate and distinct services. However, you may distribute the employer contributions between the two programs and implement a cap by aggregating total employer contributions within both offerings. The Retirement Plan participation and related employer match are separate from Thrive and the related student loan payment offering.
Does this benefit require changes during annual open enrollment?
Your Retirement Plan document governs the timing of employee enrollment and allowed contribution changes. It should be flexible as circumstances change. You may allow employees to change their contributions to the Thrive as often as monthly, or you may allow less frequent changes (this is at your discretion). As neither program is required to be an annual election, there is significant flexibility in how you implement it.
Do you have a Student Loan Payment plan document that our company could review?
Yes. You may also want to provide it to employees. This will help them fully understand how their distribution might affect their employer match contributions between Retirement Plans and student loan debt repayments. There are different tax consequences for each.
If our Retirement Plan is a safe harbor plan, what is the impact of also offering Employee Choice?
Thrive will not affect your Retirement Plan or its qualification as a safe harbor plan. Any employee contributions directed to the Retirement Plan will have a company match, in accordance with your Retirement Plan documents. If you offer Thrive and there are company match dollars available for student loan repayment, they will be deposited accordingly.
This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on a specific situation. In no way does advisor assure that, by using this information provided, plan sponsor will be in compliance with ESIRA regulations.
FOCUS4Financial and LPL Financial are not affiliates with Thrive.