Does the SECURE 2.0 Student Loan Provision Require a Matching Contribution?

Q: Our 403(b) plan fiduciaries are interested in the new student loan repayment provision of the SECURE 2.0 Act, but we don’t currently have a matching contribution. Would we need to add a match to add this provision?

Kimberly Boberg, Taylor Costanzo, Kelly Geloneck and David Levine, with Groom Law Group, and Michael A. Webb, senior financial adviser at CAPTRUST, answer:

A: Unfortunately, it does appear that way.

The new student loan repayment provision in Section 110 of the SECURE 2.0 Act of 2022, which allows student loan repayments to be treated as elective deferrals in 403(b), 401(k) and governmental 457(b) plans beginning in 2024, amends Section 401(m) and other sections that specifically relate to matching contributions. The provision specifically provides for matching contributions on student loan repayments at the same rate as those on elective deferrals, and only for those employees eligible to receive matching contributions on elective deferrals, thus anticipating the use of such student loan repayments only in a plan with employer matching contributions on elective deferrals.

The IRS has been directed under the SECURE 2.0 Act to publish regulations to implement the amendments under this provision, so the IRS might provide some additional clarity on the requirements of such program.

NOTE: This feature is to provide general information only, does not constitute legal advice and cannot be used or substituted for legal or tax advice.

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