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Securing Talent: How Educational Assistance Plans Give Practices a Competitive Edge

One of the biggest stressors for practice owners is the difficulty in attracting and retaining staff. How can you differentiate yourself to capture the attention of top talent?

Pay, time off, as well as health, dental, and retirement benefit offerings are important and becoming more prevalent, almost to the point of being an expectation. However, less tangible, unique benefits often are what go the farthest with staff.

Educational Assistance Program (EAP)

One such benefit offering is an Educational Assistance Plan (EAP). These plans are used to help further employee education and certifications but uniquely, through 2025, these plans can also be alternatively used to pay down student loans, limited to $5,250 per year, per employee.

This window provides a unique opportunity for practices to benefit employees in a manner that has tax savings for both the employee and the practice, a true rarity in the current tax code.

EAPs can be formalized at any time and put in place retroactively to January 1st, provided some key conditions are met. At a very basic, general, and non-exhaustive level:

  • The plan must be in writing
  • Reasonable notification of the plan is provided to employees
  • Employees cannot have a choice between compensation and the EAP benefit
  • The plan does not discriminate in favor of highly compensated employees (though some differentiation is certainly allowed)
  • No more than 5% of all plan benefits can be paid to greater than 5% of the owners
  • Education expenses must meet IRS qualifications and the $5,250 annual limit is to be tax-free to the employee and deductible to the practice

The actual laws behind these plans are technical, so work closely with your advisors and possibly legal counsel to put the qualified plan in place, tailor the plan to your practice, and implement best practices for administering the plan to ensure it meets IRS qualifications.

Many practices already have some of the framework for an EAP in place, so formally documenting the plan or amending a plan to make payments to student loan balances as a qualified expense represents a small step but a major opportunity to provide a very attractive selling point for new hires and for retaining current staff.

From a cost standpoint, an EAP offering saves payroll and income taxes for both the practice and employee on what otherwise would be a taxable fringe benefit. This is certainly something to consider as the calendar year-end approaches and practice owners look to reduce upcoming tax liabilities for the year.

Contact one of SVA's professionals today to learn more and help position your practice into the future.

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Possible Wisconsin Form 1099 Law Change

As the calendar year concludes and the compliance season begins, legislation is expected that will impact Federal Forms 1099 reporting for payments to contractors and Personal Property Tax filing requirements in Wisconsin.

These represent cumbersome required annual filings for many businesses. Stay tuned for updated guidance and commentary from SVA through the WVMA and our webinar series. Visit SVA.com/VetSeries for more information and to register.

© 2023 SVA Certified Public Accountants

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Biz Tip Topic Expert: Nathan Dreikosen, CPA

Nathan Dreikosen, CPA

Nate is a Senior Manager at SVA Certified Public Accountants focusing on the healthcare, dental, and veterinary industries. He works with practices in the southern Wisconsin and Fox Valley areas to manage cash flow, assess financial performance and growth, and evaluate expenditures. He also has experience in designing compensation models, tax planning, and providing guidance on tax implications for clients. He works with corporations, partnerships, and individuals of all sizes and ownership structures.

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