The Internal Revenue Service (IRS) has released interim guidance aimed at sponsors of 401(k) and similar retirement plans, focusing on offering matching contributions based on eligible student loan payments made by participating employees. This guidance is detailed in Notice 2024-63, which was announced today.
The new guidance reflects the provisions of section 110 of the SECURE 2.0 Act of 2022, enabling employers to include matching contributions linked to their employees’ student loan payments. Effective for plan years beginning after December 31, 2023, this legislation benefits employers with various retirement plans, including 401(k), 403(b), governmental 457(b), and SIMPLE IRA plans.
Notice 2024-63 adopts a question-and-answer format, providing illustrative examples to clarify several plan-administration matters. Key topics addressed include:
- Eligibility rules for student loan matching contributions, detailing dollar limits and timing constraints.
- Requirements for employee certification that must be fulfilled to validate student loan matching contributions.
- Procedures that plans can implement regarding student loan matching contributions.
- Nondiscrimination testing relief available for 401(k) plans incorporating student loan matching contributions.
This guidance will be applicable to plan years starting after December 31, 2024. The IRS is expected to release proposed regulations for additional clarity on section 110, with plan sponsors allowed to rely on this notice in the interim.
Additionally, the IRS is encouraging public comments on this notice, providing specific instructions on how to submit feedback.
