The IRS has issued a series of questions and answers for 401(k) and similar retirement plans that provide, or wish to provide, matching contributions based on eligible qualified student loan payments (QSLPs) made by their participating employees.
The SECURE 2.0 Act of 2022 permits employers with a 401(k) plan, 403(b) plan, governmental 457(b) plan 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 addresses a variety of plan-administration issues that are related to this provision. Among other issues, the notice addresses:
- General definitions as to what a QSLP is, and student loan matching contribution eligibility rules (including dollar and timing limitations);
- What is required for an employee certification that student loan matching contribution requirements have been met;
- Reasonable student loan matching contribution procedures that a plan may adopt; and,
- Special nondiscrimination testing relief for 401(k) plans that include student loan matching contributions.
The IRS plans to issue proposed regulations on QSLPs at a later date, but plan sponsors may rely on this notice until those regulations are issued. The notice applies for plan years beginning after December 31, 2024.
