The Internal Revenue Service (IRS) has issued new guidance for employers and employees regarding matching contributions to retirement plans based on employees’ student loan payments.
The government agency issued new guidelines that allows employers with 401(k), 403(b), 457(b) plans and SIMPLE IRAs to make matching contributions to an employee’s retirement fund based on their student loan repayments. It implements section 110 of the SECURE 2.0 Act, which was signed into law by President Joe Biden in December 2022.
Many individuals who are repaying student loans may not have the financial ability to save for retirement as well, which means they not only miss out on potential retirement savings, but also lose the opportunity for employer matching contributions.
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