SECURE 2.0 Provision – Qualified Student Loan Payments

SECURE 2.0 includes an optional provision allowing an employer to make matching contributions based on a participant's student loan payments. The provision seeks to address concerns that employees with student loans forego voluntary retirement contributions to make student loan payments, thereby missing out on the employer's match. This will likely be popular for employers hiring college graduates, especially those hiring new graduates with significant student debt. Additional administrative guidance will likely be needed before plans implement the option in 2024.  

The first question a plan sponsor should ask is whether their plan is a matching plan. If the participant does not have to contribute to receive the employer contribution, then the provision does not apply. For matching plans that do add the provision, there is already some guidance that will ease the administrative burden:

  • Employees may self-certify their loan payments, although employers may ask for receipts or payment records to ensure payments were for qualified student loans.
  • Guidance is expected to allow the employer match to be made less frequently than regular plan matches. This will provide flexibility and some administrative control over the program (i.e., having a window for self-certification or making matching contributions once a year).

The student loan provision provides an opportunity to support retirement savings for individuals who otherwise cannot contribute to their retirement plan. Plan sponsors willing to implement this option's additional administration may find it a valuable benefit to attract and retain employees.

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