Dive Brief:
- The IRS on Monday detailed the steps employers must take when contributing student loan payment matches to workers’ defined contribution plans — a benefit offering that became available this year.
- Among other things, the agency clarified eligibility rules and certification requirements in a question-and-answer format.
- The interim guidance applies to plan years beginning after Dec. 31, 2024. The IRS said it will propose regulations providing further guidance, but that plan sponsors may rely on Monday’s notice for now.
Dive Insight:
The SECURE 2.0 Act, enacted in 2022, aimed to address shortfalls in employee retirement savings. It allowed for the creation of pension-linked emergency savings accounts, expanded auto-enrollment requirements for retirement plans and, relevant to Monday’s guidance, allowed for matching contributions based on employee student loan payments.
Specifically, that final provision allows plan sponsors to make matching contributions to defined contribution retirement plans with respect to employees’ qualified student loan payments as if they were pretax, Roth or after-tax contributions, according to an analysis from consulting firm Mercer; employers can offer the match to any employee eligible to participate in the plan, even if the employee doesn’t contribute to it.
Employers should consider such matching as a way to attract and retain talent, Mary Moreland, executive vice president of human resources at Abbott, urged HR professionals in a June op-ed.
She cautioned, however, that such offerings take time to deploy, recommending that benefits professionals allow for six to 12 months of planning. Communication plans must be crafted carefully and one-on-one conversations can increase employee engagement and comfort with the program, she added.
Employers will soon be invited to comment on Monday’s notice and provide feedback before the IRS drafts regulations. Once the notice is published in the Federal Register, the agency will accept comments for 60 days.