Student Loan Repayment Relief

Signed into law in 2022, the SECURE Act 2.0 (“the Act”) introduced a significant benefit for employees burdened with student loan debt: A student loan match program.

The Act gives employers the option to make retirement plan contributions on behalf of employees who are repaying qualified student loans, even if those employees are not contributing directly to a retirement plan. This means that if an employee is using disposable income to pay off student loans and cannot afford to contribute to a 401(k) or similar plan, the employer can still make a matching contribution – up to the amount of each loan payment – to the employee’s retirement account.

Under the program, the employer’s contribution is treated the same as if the employee had directly contributed to the retirement plan. Qualifying employees may need to provide proof of payment, such as receipts or account statements, for employers to calculate and make the matching contributions.

This provision addresses a growing concern among younger workers who are delaying retirement savings to manage student debt. By allowing employers to contribute to retirement accounts based on student loan payments, the Act helps ensure that employees do not miss out on critical years of retirement savings.

Employers with questions about implementing a student loan match program should contact the employment law attorneys at Wright Beamer today at 248.477.6300.