Unemployment is low, so attracting and keeping employees can be challenging. To stand out, you may want to consider adding this new option to your existing benefits package.

The IRS has introduced a new way to help your employees tackle student loans and save for retirement simultaneously. Under the SECURE 2.0 Act of 2022, for 2024 and going forward, you can match employees’ student loan payments with retirement contributions. This new benefit could be a game-changer for attracting and retaining talented staff.

How It Works

• Matching Contributions: Traditionally, matching was only for retirement plan contributions. Now, you can also match student loan payments, providing a valuable benefit for employees who would like to save for the future but feel they must first focus on paying off their educational debt.

• Eligibility Requirements: Most federal or private student loan payments will qualify as long as the funds were used for higher education. Employees must still certify their payments meet the criteria set by the IRS and the retirement plan to ensure only eligible payments get matched.

• Plan Flexibility: The IRS allows you to integrate these matching contributions into your existing retirement plans, and you can tailor the implementation to suit your specific plan structure.

• Compliance Simplified: To reduce compliance headaches, the IRS provides “special nondiscrimination testing relief” for this program. Normally, 401(k) plans must prove that more highly paid employees aren’t get disproportionately higher benefits than other team members. This program doesn’t have that same requirement, making it easier to offer it without running into legal issues.

Why This Matters

This option is an excellent way to enhance your benefits package, making your company more attractive to potential hires and current team members, especially younger employees burdened by student loans. It also shows that you’re invested in their long-term financial well-being.

What To Do Next Next

Check out IRS Notice 2024-63 to see how this new benefit can fit into your company’s retirement plan. If you’re ready to add this option or need guidance, we’re here to help you navigate the setup and ensure everything runs smoothly.