WASHINGTON, D.C. — The Internal Revenue Service (IRS) has released interim guidance under Notice 2024-63, offering clarity for retirement plan sponsors on matching contributions tied to student loan payments. This new provision, stemming from section 110 of the SECURE 2.0 Act of 2022, enables employers to match contributions based on student loan repayments, marking a significant shift in retirement planning.
Effective for plan years starting after December 31, 2023, employers with 401(k), 403(b), governmental 457(b), or SIMPLE IRA plans can now consider student loan payments as a basis for matching contributions. This guidance seeks to integrate student loan repayments into retirement savings strategies, potentially increasing participation among employees burdened with student debt.
The IRS notice comprehensively addresses eligibility criteria, noting that specific dollar and timing constraints apply. It also outlines the procedural requirements for employee certification, ensuring that loan payments meet the conditions for matching contributions.
Further, the notice includes a special nondiscrimination testing relief for 401(k) plans incorporating these new matching contributions, aiming to maintain fairness across employee benefit structures. The IRS intends to issue proposed regulations for further guidance, but until then, plan sponsors can rely on the current notice.
This initiative underscores the IRS’s commitment to evolving retirement savings frameworks, aligning them more closely with the financial realities facing today’s workforce. The integration of student loan payments into retirement contribution strategies presents a forward-thinking approach to both debt management and savings growth.
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