New IRS Guidelines: Employer Matching Contributions for Student Loan Payments Explained 

AAFCPAs would like to make clients aware that the Internal Revenue Service has issued important interim guidance for employers offering retirement plans, which presents a new opportunity to enhance employee benefits. This guidance, detailed in Notice 2024-63, explains how employers may provide matching contributions to retirement plans based on employee student loan payments, as outlined in the SECURE 2.0 Act of 2022. 

SECURE 2.0 represents a significant shift in how retirement benefits may be structured. For the first time, employers may now offer matching contributions to 401(k), 403(b), governmental 457(b), and SIMPLE IRA plans based on qualifying student loan payments made by employees. This provision offers a compelling incentive for employees managing student debt while also building their retirement savings. 

Key Features of the Guidance 

Guidance, effective for plan years beginning after December 31, 2024, introduces several critical features. 

• Eligibility Rules: The notice outlines eligibility criteria for student loan matching contributions including specific dollar and timing limitations.  

• Employee Certification Requirements: Employees must certify that they have made eligible student loan payments to qualify for matching contributions. The notice provides clarity on what this certification process entails. 

• Plan Procedures: The IRS details reasonable procedures that retirement plans may adopt to facilitate student loan matching contributions, ensuring employers can effectively integrate this new benefit into existing plan structures. 

• Nondiscrimination Testing Relief: For 401(k) plans incorporating student loan matching contributions, the notice offers special relief from certain nondiscrimination testing requirements. 

While the interim guidance offers a foundation for employers wishing to adopt this benefit, the IRS plans to issue further regulations in the future. Until these proposed regulations are released, employers may rely on the interim guidance in Notice 2024-63. 

How We Help 

AAFCPAs helps clients navigate the complexities of new IRS guidance on student loan matching contributions by offering comprehensive support in plan design, regulatory compliance, and plan administration. We help employers modify retirement plans to incorporate new contributions, establish employee certification procedures, and ensure adherence to special nondiscrimination testing requirements. We also provide ongoing plan management, employee education, and strategic guidance to maximize the benefits of these provisions, all while keeping clients informed on any regulatory updates. Our goal is to ensure that your retirement plans are compliant, efficient, and aligned with your broader financial objectives. 

If you have questions, please contact Shawn P. Huxley, CPA, MSA, Partner, Employee Benefit Plans at 774.512.9075 or shuxley@aafcpa.com, Jonathan Bloom, CFP®, AIF®, Partner & Wealth Advisor at 774.512.4081 or jbloom@aafwealth.com—or your AAFCPAs Partner.