Posted on: October 9, 2023
With federal student loan repayment resuming this fall, millions of borrowers will be required to allocate money for student loan debt as well as retirement, emergency savings, and all the other necessities of their budget.
News of SECURE Act 2.0 and its 92 provisions has been widely publicized in the media. There have been sample emails for how to ask your employer to implement a provision that allows student loan payments to be recognized as eligible contributions to a retirement account for matching purposes. We also saw with the Great Resignation that began in 2021 that employees won’t hesitate to leave an employer for a variety of reasons – or seemingly no reason at all.
Signs point to the fact that today’s employees are smart, and they’re concerned about benefits that will help them with the challenge of paying off student loan debt while they save for retirement. A growing number of them are learning about SECURE Act 2.0’s provision that allows employers to help employees balance student loan debt with retirement saving. For two very important reasons, it makes sense to learn more about SECURE Act 2.0 and how you can use it to offer benefits to assist your employees with their financial goals:
- Employees are facing new challenges in today’s economy – and you can help them.
- Employees know you can help them. Why not change your benefits before they ask for them (or leave for another employer)?
Let’s explore these two points more closely.
Employees face economic challenges – and employers can help them.
In the past few years, you may have had more employees taking advantage of employer match funds. With federal student loan payments due starting in October, many employees may find themselves unable to make the full contribution required to qualify for employer match. This is how SECURE Act 2.0 allows employers to help – by letting them change their retirement plan to recognize student loan payments as qualifying contributions to a retirement plan for matching purposes. If you can do this to help your employees, why wouldn’t you do it?
Maybe you don’t have many employees who have student loan debt? There are other provisions of SECURE Act 2.0 that most of your employees could benefit from – such as the ability to set up an emergency savings account for employees that’s tied to their retirement account. We encourage you to learn more about SECURE Act 2.0 and how its provisions make it easier for you to help your employees save for retirement or use their retirement accounts more effectively.
Employees know you can help them – so be proactive and change your benefits.
Not all of your employees will know about SECURE Act 2.0, but we won’t be surprised if you’re getting requests from at least a few employees now to make changes to your benefits for 2024. You can build loyalty and engagement among your employees by showing them that you understand financial stressors they face. All you need to do is let them know that you’re taking advantage of opportunities to help them improve their situation by amending your benefits.
Why give your employees a reason to start looking around at benefits other employers offer? They may be looking for a student loan repayment benefit – where the employer actually contributes to student loan payments for some or all of their employees. Some employees may feel financially strapped enough to leave for a company that offers a benefit like this.
Wondering how to make changes to your benefits?
It’s fairly simple to amend your retirement plan to include student loan payments as elective deferrals for the SECURE Act 2.0 provision. Other changes and their implementation may require more bandwidth than your company has to give. If that’s the case, consider contacting BenefitEd. We work with employers of all sizes and can customize programs to fit your needs. It’s a simple process, and we work with you from start to finish.
When employees need important benefits to stay afloat – and they’re going to look for employers who offer key benefits to help them make ends meet – it’s crucial that you take the time to look closely at the benefits you’re providing. Reach out to us today and let’s talk about how we can assist you in retaining and engaging your employees.