IRS Issues Interim Guidance on Employer Matching Contributions for Retirement Plans Linked to Employee Student Loan Payments

The Internal Revenue Service (IRS) has issued interim guidance for sponsors of 401(k) and similar retirement plans that provide, or wish to provide, matching contributions based on eligible student loan payments made by their participating employees. This guidance is outlined in Notice 2024-63, which was posted today on IRS.gov.

This guidance implements section 110 of the SECURE 2.0 Act of 2022, which permits employers to provide matching contributions for employees based on their payments on student loans. The legislation allows employers with a 401(k) plan, 403(b) plan, governmental 457(b) plan, or SIMPLE IRA plan to offer these matching contributions for plan years beginning after December 31, 2023.

Notice 2024-63 uses a question-and-answer format, including illustrative examples, to address a variety of plan-administration issues. The notice covers:

• General student loan matching contribution eligibility rules, including dollar and timing limitations.
• Employee certification requirements that confirm student loan matching contribution requirements have been met.
• Reasonable procedures that a plan may adopt for student loan matching contributions.
• Special nondiscrimination testing relief for 401(k) plans that include student loan matching contributions.

This notice applies to plan years beginning after December 31, 2024. The IRS plans to issue proposed regulations providing further guidance on section 110. Plan sponsors may rely on this notice until the proposed regulations are issued.

The IRS is inviting public comments on this notice, which provides details on how to submit comments.

This article, "IRS Issues Interim Guidance on Employer Matching Contributions for Retirement Plans Linked to Employee Student Loan Payments" was first published on Small Business Trends