SECURE Act 2.0

BenefitEd can help you integrate optional provisions from SECURE Act 2.0 into your benefits, helping your employees with student loan debt save for the future – while you boost recruitment and retention for your organization.

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Benefits of Partnering with BenefitEd

Recognize Student Loan Payments for Employer Match

By adapting your plan to integrate optional provisions for student loan match, you boost retirement plan participation and allow employees who haven’t been able to participate in employer match dollars to begin saving for their future.

Customize the Plan to Your Needs

You choose which optional provisions you incorporate (student loan match, emergency savings account, etc.) – and we help you set your program up for simple administration in compliance with your policies and SECURE Act 2.0.

Gain a Recruitment and Retention Edge

Savvy employees will call for student loan match through SECURE Act 2.0. Setting your program up to serve them shows you care about their needs, eases their financial stress, and gives you an edge over competitors.

Minimize Administration Burden

We’re a trusted, administrative partner that offers flexible options for setting up student loan match through self-reporting or payroll deduction – whichever you prefer. We’ll walk you through the simple set-up process.

Help your employees by including optional SECURE Act 2.0 provisions in your plan.

When you recognize the challenges your employees face in saving for their retirement and offer benefits to relieve their financial stress, your employees feel seen. The 92 provisions of SECURE Act 2.0 were designed to expand access to retirement savings and get people saving more for retirement by improving retirement rules and reducing costs for employers setting up retirement plans. Implementing optional provisions – such as student loan match and emergency savings accounts – are two ways your organization can provide meaningful benefits that give you a competitive edge.

In today’s job market, showing you care about your employees by providing benefits that address their needs helps you:

  1. Retain and engage employees.
  2. Create a happier, more productive workforce.
  3. Gain a recruiting edge over competitors.

Most employers have employees spanning different life stages with a variety of financial needs and concerns. With various optional provisions in SECURE Act 2.0, you can help virtually every group of employees you have.

Employees Who Have Student Loan Debt

The return to student loan repayment will impact anyone with federal student loans. Changing your retirement plan to recognize student loan payments as qualifying contributions to your retirement plan allows employees who may otherwise be unable to save toward retirement to benefit from your match dollars and begin saving earlier. Learn more about how this works.

Employees Who May Need Emergency Savings

You can allow employees to create a “sidecar” account tied to their retirement account designated for emergency savings, capped at $2,500 or whatever smaller amount you choose. Or, you can auto-enroll your employees at a rate of up to 3% of their pay into sidecar accounts and allow withdrawals at least monthly. There are limitations on who can contribute to a sidecar account. Learn more about how this works.

How the Program Works for Students with Education Debt

Employer Changes Plan and Communicates the Change

The employer decides to amend their retirement plan to include student loan payments as elective deferrals, officially changes the plan documents, and communicates and promotes the change to employees. Employees who participate are responsible for making their regular minimum monthly student loan payment.

Employer Sets Up Enrollment and Investment Selection

The employer works with the retirement plan provider to offer enrollment and investment selection options to employees. Employers can set up their matching contribution to automatically go toward retirement or they can offer employees a choice of having matching dollars go toward retirement, student loan debt, or a combination. Employees enroll with the retirement plan, providing participation information and making their investment selections.

Employer Sets Up Student Loan Contributions with BenefitEd

The employer works with BenefitEd, who sets up student loan payments for employees. Participating employees enroll with BenefitEd for student loan payments and tracking. The payments can be self-reported by the employee or we can set up automatic payroll deduction and have data aggregated automatically for the employer.

Employer Makes Matching Contribution Based on Student Loan Data

The employer receives reporting and student loan contribution data from BenefitEd and makes matching retirement contributions based on their plan’s policy and the employee’s plan elections.

Employer Helps Employees Reduce Financial Stress

With the provision (and BenefitEd’s flexible program options), the employer can help ease financial stress by helping employees who previously couldn’t save for retirement compound the positive impact of saving early. Or, they can offer employees the freedom to choose where they need the most help with employer match dollars – either way, employees are now participating and receiving match dollars.

Employer Impact and Benefits

This program attracts informed candidates, builds employee engagement and loyalty, and keeps educated employees who appreciate help with employer match dollars while they pay off student loan debt.

Frequently Asked Questions

Yes, beginning in 2024, this optional provision allows for employers to make matching contributions to an employee's 401(k) plan, 403(b) plan, or SIMPLE IRA based on qualified student loan payments. Employers may make matching contributions to both elective deferrals and loan payments, but not in excess of the regular matching contributions that are available in the plan.
To receive the match, an employee must annually certify to the employer that Qualified Student Loan Payments (QSLPs) have been made. SECURE 2.0 allows employers to rely on the employee’s certification without substantiation. However, the statute directs Treasury to issue regulations allowing employers to establish reasonable procedures for employees to claim the QSLP match. Those regulations could allow employers to require substantiating documentation.
  • A QSLP matching contribution can only be provided to employees eligible to receive a match on their elective deferrals.
  • All employees eligible to receive a matching contribution on their elective deferrals must be eligible to receive a matching contribution on their QSLPs.
  • The plan must match elective deferrals and QSLPs at the same rate.
  • A QSLP matching contribution must vest in the same manner as the match on elective deferrals.
  • Match frequencies can differ, as long as the QSLP match is made at least annually.
The maximum amount of loan payments that can be treated as QSLPs in any year is capped at the applicable elective deferral limit under Section 402(g) of the Internal Revenue Code of 1986, as amended (e.g., $22,500 for 2023) or, if less, the amount of the employee’s compensation for purposes of applying the Code Section 415 annual additions limit. Keep in mind that this maximum amount is reduced by any elective deferrals that an employee contributes to the plan. The combination of the employee’s elective deferrals to the plan and the QSLPs may not exceed the Code Section 402(g) elective deferral limit.
The matching contributions must satisfy certain nondiscrimination testing requirements, but SECURE 2.0 established relatively favorable rules in this regard. In particular, (1) QSLPs may be treated as elective deferrals for purposes of determining whether nondiscrimination testing safe harbors are satisfied; (2) as a plan feature, matching contributions on QSLPs generally will be treated as being available to all participants, including participants who do not have outstanding student loans; and (3) plan sponsors may apply the annual deferral percentage tests separately to those participants who receive matching contributions on account of QSLPs.
Employee loan deductions go directly to the servicer of the student loan payment. The employer match portion goes to the employee’s retirement plan account.
When does it make business sense to add student loan match for recruitment and retention?
  • When retention is an issue or hiring is very competitive, student loan match can save an employer on recruitment, hiring, and training costs. At BenefitEd, we’ve seen up to 30 times the retention versus control groups when student loan match programs are added, depending on how severe an employer’s retention issues are.
How many employees may take advantage of student loan match?
  • Again, depending on the makeup of your employee base, we expect that approximately 5 to 10% of employee participation in a student loan match may be typical for most employers.
What is the cost to the employer for program administration of a student loan match program?
  • Most retirement match plans are typically already budgeted for by the employer. Administrative costs are typically $5 per person, per month.
Student loan debt impacts millions of Americans, ranging across all ages and demographics – from Gen Z through baby boomers. Explore how this issue impacts American workers and how employers can use SECURE Act 2.0’s student loan match to make a difference.

Sources:

https://www.mercer.com/insights/law-and-policy/secure-2-0-student-loan-match-101/
https://www.morganlewis.com/pubs/2023/05/secure-act-2-0-analysis-of-expanded-matching-contribution-and-emergency-savings-account-provisions

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Featured Resources

In our Resource Center, you’ll find useful articles, videos, case studies, white papers, and more. These resources provide information on how to achieve your business objectives by effectively using education benefits to attract and engage employees.

blog 4 Reasons to Help Employees Prepare for Student Loan Repayment

After three years without federal student loan payments, many of your employees will feel the pinch when the payment pause ends.

blog The Impact of Employer-Assisted Student Loan Repayment

With more than 44 million federal student loan borrowers, many college grads entering the workforce need help repaying their loan debt.

whitepapers Student Loans in 2023

What’s happening in the student loan industry, tax changes, employer benefits, and more.
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