Written plan: the program must be a separate written plan of the employer providing educational assistance for the exclusive benefit of the company's employees. A sole proprietor may treat himself as employer and employee and a partnership will be treated as the employer of all self-employed partners.
Nondiscrimination: the program must benefit employees who qualify under a classification set up by the employer that does not discriminate in favor of highly compensated employees, as defined in IRC Section 414(q). Generally, highly compensated employees are 5 percent owners or members of the top-paid group of employees. Employees covered by a collective bargaining agreement may be excluded if educational assistance benefits were the subject of good faith bargaining.
More than 5 percent owners: the class of shareholders and their spouses and dependents, each of whom owns more than 5 percent of the employer's stock, cannot receive more than 5 percent of the educational benefit amounts.
Employee choice: a program cannot offer employees a choice between educational assistance and other benefits that are includable in income.
Funding: an educational assistance program may be funded or unfunded.
Notification: eligible employees must receive reasonable notification of the program's availability and benefits.

A plan will still be considered in compliance with these requirements even though different types of educational assistance are used more than others or because successful completion of the course or obtaining a certain grade is required or considered in the process of obtaining reimbursement under the plan.

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What's required for employer-sponsored tuition assistance programs

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