The Internal Revenue Service implemented Section 110 of the SECURE 2.0 Act of 2022, which for the first time permits employers to provide matching contributions for employees based on their payments on student loans.
The guidance is in
The 2022 legislation permits employers with a 401(k), 403(b), 457(b) or SIMPLE IRA plan to provide matching contributions based on student loan payments, rather than based only on elective contributions to retirement plans, in plan years beginning after Dec. 31, 2023.
The notice, which applies for plan years beginning after Dec. 31, 2024, addresses, among other issues:
- Student loan matching contribution eligibility;
- Requirements for an employee certification that student loan matching contribution requirements have been met;
- Reasonable matching contribution procedures; and,
- Nondiscrimination testing relief for 401(k) plans that include student loan matching contributions.
The IRS plans proposed regulations providing further guidance on Sec. 110. Plan sponsors may rely on the notice until the proposed regulations are issued.
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