Secure 2.0’s Section 110 Gives Employers Administrative Flexibility for Student Loan Retirement Match
The IRS recently issued interim guidance on section 110 of the Secure 2.0 Act. For those who haven’t followed these new guidance drops as closely as Summer, the IRS update gives employers more clarity and flexibility on student loan matching for 401(k) contributions.
Student loan retirement matching benefits have only increased in demand since the moratorium on student loan payments was lifted. 78% of employees think their employers should help them with student loan debt, and employers are scrambling to put Secure 2.0 student loan retirement matching plans in place.
Summer ensures your company can roll out these benefits easily, efficiently, and stress free.
What the Law Says: Student Loan Retirement Matching
Section 110 of Secure 2.0 pertains specifically to student loan retirement matching. It allows employers to contribute to retirement plans by matching their employees’ student loan payments, not just standard deferrals to their retirement plan.
This is expected to make a huge impact on the economic well-being of employees with student debt. It will also be advantageous for employers, who will receive tax credits, will see increased participation in 401(k) and other retirement plans, and can leverage this high-demand benefit for their recruiting and retention efforts.
IRS Interim Guidance on Implementation
The newest guidance gives plan sponsors and retirement providers ample flexibility to implement the benefit using reasonable procedures. Self certification is allowed, but verification of key elements of the student loan payments are still required.
Annual certification requirements include the following items:
- Loan payment amount
- Date of payment
- Payment was made by the employee
And the following items need to be recertified if they ever change:
- The loan being repaid is a qualified student loan (QSL) of employee, their spouse, or their dependent
- The loan was incurred by the employee
Full guidance from the IRS can be found here, and the American Society of Pension Professionals & Actuaries (ASPPA) provided thorough highlights here. However, there is still a comment period on the latest guidance, so further questions and clarifications can be submitted to the IRS.
Now the Complicated Part Begins
How can employers implement and operate 401(k) matching for student loans without a huge administrative burden?
Enter: Summer Secure
One of the provisions of Section 110 is that employers can independently certify student loans and payments. Summer performs this certification for you, ensuring all reported items meet the requirements.
Summer partners with plan sponsors, payroll providers, and 401(k) & 403(b) record keepers to deliver a seamless Student Loan Retirement Match experience assured to increase plan participation.
Summer enrolls participants, verifies loans, and shares payment information with plan sponsors and administrators, keeping the entire process efficient, on time for reporting deadlines, and compliant.
Benefits Focused on the Future
When employees are less stressed about money, they’re more engaged, productive, and likely to stay with their employer for longer. When 20% of Americans with undergraduate degrees carry student loan debt, student loan matching becomes a competitive benefit for employers in every sector and industry.
Section 110 gives employers the flexibility to offer employees the compounded benefit of saving for retirement by making payments on their student loans. Historically, employees felt they had to pay off debt first, which stalled progress on their retirement savings.
Ready to onboard the most in-demand benefits for your employees? Talk to an expert about Student Loan Retirement Matching today.
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