IRS Provides Guidance for Employer 401(k)/403(b) Match of Student Loan Payments

The SECURE ACT 2.0 provides that employers can make contributions to employee accounts as a match for the employees’ payments made on their student loans. According to ADP, following are some of the provisions of the IRS Notice #2024-63 (at https://www.irs.gov/pub/irs-drop/n-24-63.pdf), for which final regulations are still to be issued, and on which employers may still comment:

• Qualifying student loan payments may include payments made by the employee for the employee's student loan, or that of the employee's spouse or dependent, if the loan was incurred by the employee.

• The maximum qualified student loan payment for a year cannot exceed the limit under section 402(g) (e.g., $23,000 for 2024).

• Student loan matching programs may not limit matches to only certain education loans, such as those for a particular degree program (e.g., undergraduate, graduate, Juris Doctor, etc.), or for attendance at a specific school.

• Student loan matching programs must generally apply uniform treatment to all employees covered by a plan, so differential treatment of employees in different business units, divisions, locations, or other similar basis is not permitted.

• Employers may rely on an employee's certification of aggregate student loan payments for a year. The certification must include the amounts and dates of loan payments, and a statement that the payment was made by the employee; that the loan is a qualified education loan and was used to pay for qualified higher education expenses of the employee (or the employee's spouse or dependent); and that the loan was incurred by the employee. Some of the certification requirements may be satisfied through independent verification by the employer or through passive certification by the employee, but the statements can only be certified through an affirmative certification by the employee.