IRS Issues Interim Guidance on Employer Matching Contributions to Retirement Plans Linked to Employee 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, posted today on IRS.gov.

This guidance implements section 110 of the SECURE 2.0 Act of 2022, which allows employers to provide matching contributions to employees based on their student loan payments. The law allows employers with a 401(k), 403(b) plan, government 457(b) plan or SIMPLE IRA plan to make 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 program management issues. The notice includes:

• General student loan offer eligibility rulesincluding dollar and time limits.
• Labor certification requirements which ensures that student loan matching contribution requirements are met.
• Logical processes which may be taken up by the student loan matching contribution program.
• Special aid for non-discrimination testing with 401(k) plans that include student loan matching contributions.

This notice is effective for plan years beginning after December 31, 2024. The IRS plans to issue proposed regulations that provide additional guidance on section 110. Plan sponsors may rely on this notice until the proposed regulations are issued.

The IRS invites public comment on this notice, which provides details on how to submit comments.