The IRS has issued new interim guidance for employers looking to match retirement contributions based on employees’ student loan payments.
On August 19, 2024, the IRS released Notice 2024-63, which clarifies how companies can implement the student loan feature under the SECURE 2.0 Act, effective in 2024.
This guidance comes as many employers have delayed offering these student loan payment (QSLP) matches while waiting for more detailed instructions. The IRS’s Q&A-style notice covers eligibility, annual certification, and compliance testing, providing much-needed clarity.
The SECURE 2.0 Act allows employers to match contributions to 401(k), 403(b), 457(b) plans, and SIMPLE IRAs based on employees’ payments toward qualified student loans, even if the employees aren’t contributing to their retirement plans. This is a significant change, especially for those with large student loans who haven’t been able to save for retirement.
To qualify, employees must certify that their student loan payments meet the requirements set by the IRS. Employers can then match these payments under the same terms as they would for traditional retirement contributions.
The new guidance also offers flexibility in how these student loan programs can be administered, potentially reducing the burden on employers. For example, companies can choose how often to match contributions and what verification process to use.
This interim guidance is expected to encourage more employers to adopt QSLP matching features, helping employees manage student debt while saving for retirement. The IRS plans to issue further regulations, and employers can rely on this guidance for plan years starting in 2025.
