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Companies recognize that continued education is essential to enhance employee competence at all levels within the organization. The development process enables employees to become more proficient in their present jobs and provide insight into their potential for advancement.
A company must establish a written plan to assist employees financially for approved educational courses.
In order to be considered a qualified educational assistance program which is nontaxable income to the employee, certain requirements must be met under Internal Revenue Code Section 127 :
The courses are not required to be job related. However, in general, courses related to sports, games, or hobbies, are only covered under Section 127 if they are required as part of a degree program.
A company must establish a written plan to assist employees financially for approved educational courses — graduate or undergraduate, professional certifications and classes to prepare for professional certifications. Any type of course, certification, class or anything covered under such a policy must usually be pre-approved by Human Resources.
The company usually expects that individuals receiving significant reimbursements for completion of approved courses will reciprocate to the company in productivity and service longevity. Any employee who voluntarily terminates employment with the company within a specific time period after completing a course of study for which reimbursement was received under the policy may be required to repay a certain percentage of the money received during the preceding 12 months.
Spouses or dependents are not eligible for this program.