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Retirement Planning > Saving for Retirement

How Secure 2.0 Act Helps Workers With Student Loans

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What You Need to Know

  • Beginning in 2024, employers will be entitled to make matching contributions to their retirement plan based on an employee’s qualified student loan payments.
  • Providing these matching contributions will be optional.
  • Employers might want to consider participating to attract and retain top talent.

Americans today carry trillions of dollars’ worth of student loan debt. While student loans provide a powerful solution to allow ordinary Americans to access higher education, those loans can also stand in the way of a taxpayer’s ability to save for retirement during prime earning years.

Because student loans may prevent employees from contributing to employer-sponsored retirement plans, employees with student loans become less likely to receive the benefit of employer matching contributions.

Beginning in 2024, employers will have the option of treating employees’ qualified student loan payments as elective deferrals for purposes of an employer’s matching contribution program under the new Secure 2.0 Act. However, not all payments are eligible — so it’s important for employers to understand the details of what constitutes a qualified student loan payment.

The New Student Loan Matching Rules

Typically, employers make matching contributions to employer-sponsored retirement plans based on the participant’s elective deferrals to the plan. For example, an employer may offer a 50% matching contribution up to 5% of the employee’s salary. So, for every dollar the employee contributions, the employer contributes an additional 50 cents — up to the compensation limit. Historically, employees have only received this benefit if they have the funds to contribute to the account.

Beginning in 2024, employers will also be entitled to make matching contributions to an employer-sponsored retirement plan based on an employee’s qualified student loan payments — even if the employee does not directly contribute to the retirement plan.

Student loan repayments are treated as contributions to the plan only for purposes of qualification testing. Further, employers are permitted to either include these matching contributions with their general non-discrimination testing or test participants who receive these loan-based matching contributions as a separate group.

The provision applies to any type of employer-sponsored deferral-based retirement plan, including 401(k)s, 403(b)s, SIMPLE IRAs and governmental 457(b) plans. Under the new law, the employer must treat the qualified student loan payment match in the same manner as the employer’s deferral-based matching contribution.

What Payments Qualify for Employer Matching?

Only payments that are classified as qualified student loan payments can be considered in the employer’s matching program. A qualified student loan payment is one made on a loan taken for the sole purpose of paying qualified education expenses for the individual, a spouse or someone who was the individual’s dependent at the time the debt was incurred.

The loan must be for education provided during an academic period for an eligible student, and the expense must be paid or incurred within a reasonable period of time before or after the debt was incurred.

Qualified education expenses include tuition, fees, books, and other similar required expenses incurred by an eligible student. An eligible student, in turn, is someone enrolled at least half time (six credit hours) in a program leading to a degree, certificate or other type of recognized education credential at an eligible education institution.

Expenses incurred for games, sports, hobbies or non-credit activities do not qualify.

The law does not specify whether the student must have graduated from or completed the program for the related student loan debt to qualify. Because the student loan matching program is optional, it seems possible that the employer may be entitled to decide whether graduation is a requirement for receiving the benefit.


Though this program provision is optional, employers who employ a significant number of individuals currently repaying student loan debt may wish to consider implementing the program to attract and retain top talent. While the law itself does not provide many details, it is expected that the IRS will release regulations in the coming months — so small-business clients should pay close attention for new guidance.

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