Leveraging Creative Solutions for Tangible Outcomes

Faced with an increasingly competitive labor market, long-term McDermott client Abbott Laboratories wanted to develop a creative way to build a sustainable talent pipeline, while addressing the heavy burden of student loan debt on early-career professionals.

We partnered with Abbott in developing an innovative student loan repayment benefit as part of Abbott’s 401(k) plan: if employees contribute at least 2 percent of their salary to paying off student loans, Abbott provides a tax-exempt 5 percent retirement contribution that mirrors its 401(k) match. Our employee benefits lawyers, deeply experienced in working with the Internal Revenue Service (IRS), carefully planned and creatively packaged a request to the IRS to secure approval for this first-of-its-kind benefit.

In a private letter ruling published on August 17, 2018, the IRS granted Abbott approval to launch its ground-breaking benefit conditioned on student loan payments. The program dramatically differentiates Abbott in the crowded talent market and contributes to its culture of employee loyalty. What’s more, Abbott and McDermott’s forward-thinking partnership has opened the door for other employers to address the weight of student debt affecting their employees. Read more about the private letter ruling here.

Related Media Coverage for Abbott’s Innovative Solution

  • Chicago Tribune | Abbott 401(k) Program to Help Employees Who Have Student Debt Could Become National Model
  • Pensions & Investments | IRS Ruling on Student-Debt Help Could Prompt Other Plans to Act
  • Bloomberg Law | IRS Clears Path for Student Loan Repayment Tied to 401(k)
  • Law360| IRS Guidance Could Help Workers with Student Debt
  • SHRM | IRS Okays Amending a 401(k) Plan to Include a Student Loan Benefit Program
  • Employee Benefits News | IRS Clears Way for Student Loan Benefit Tied to 401(K)

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