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Student Loan Matches Could Boost Retirement Savings by $200,000

"That estimate is contained in [Fidelity's] 2026 State of Student Debt study, which shows that, under Fidelity’s student debt repayment program, participants receive an average of $1,900 in employer contributions based on their student loan payments. ... [T]he average student loan borrower takes more than 10 years to repay their loans – if that individual received an employer contribution through the program for 10 years, that $1,900 annual contribution could grow to nearly $200,000 at retirement age."  MORE >>

Can a Qualified Educational Assistance Program Be Used to Repay Employees' Student Loans?

"Educational assistance programs under Code Section 127 currently can be used to help employees repay certain student loans, though certain restrictions apply.... The loan repayment provision, originally set to expire at the end of 2025 ... is now permanent and applies to payments made after March 27, 2020."  MORE >>

Proposed Legislation Would Promote Student Loan Repayment Retirement Benefits

"[T]he Student Loan Act would open the door for student loan repayments to be treated as elective deferrals under an employer's plan and to qualify for corresponding matching contributions (rather than the special non-elective contributions described in [PLR 201833012]). In addition, the Student Loan Act would clarify nondiscrimination testing requirements for student loan repayment benefits and address how student loan repayment benefits may be provided under not only traditional 401(k) plans, but also under safe harbor 401(k) plans, 403(b) plans and SIMPLE plans."

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IRS Authorizes 401(k) Plan Contributions for Student Loan Repayments

"There are various legal and administrative issues to consider when designing such a Student Loan Contribution program.... In a safe harbor 401(k) plan, it may be necessary to make both the match and the Student Loan Contributions for a participant who makes both deferrals and student loan payments. The safe harbor rules require that the safe harbor match be made to all non-highly compensated employees, and the contingent benefit rule would not allow the Student Loan Contributions to be made only to employees who choose not to make deferrals. This requirement could make the student loan program prohibitively expensive."  MORE >>

Why Isn't the Student Loan Match More Popular?

"PSCA asked about the student loan match ... in Jan. 2025.... 2.6% answered that they had implemented the feature or definitely would, and 74.7% responded that they will not be adding the feature at all. ... [R]espondents answered that they didn't want to deal with the admin, they didn't have a match, or they didn't have a sizeable employee population with student loans."  MORE >>

IRS Private Letter Ruling OKs 401(k)/Student Loan Repayment Program But Issues Remain

"[1] Participant student loan repayments will not count toward [ADP] testing and the related employer non-elective contributions will not count towards [ACP] testing.... [2] The right to receive a non-elective contribution as a result of making a student loan repayment must be both currently and effectively available on a nondiscriminatory basis.... [3] [T]he fact that [generally non-highly compensated employees] are making student loan repayments rather than 401(k) elective contributions may negatively affect ADP or ACP testing results, reducing the amount that could be contributed by/for highly compensated employees.... [4] [S]tudent loan repayments ... would generally have to be made on an after-tax basis. As a result ... student loan repayments will, in effect, 'cost more' (to the participant) than regular 401(k) contributions."  MORE >>

Why Student Loan Repayment May Soon Be a Standard Employee Benefit

"Because student loan debt is so important to younger employees, companies that offer relief in this area will have a big leg up on the competition and likely be able to bolster dwindling retention rates. What's more, student loan debt isn't only an issue for Millennials. Thirty-five percent of all student loan debt is held by individuals over the age of 39. Many people also have Federal Parent PLUS Loans, loans for parents to help finance their children's college education."

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Student Loan Benefits for Employees

"Given the impact of student loan debt on a large portion of the workforce, employers may find that tax-advantaged student loan programs are significant recruiting and retention tools. [This article covers] two potential benefits that an employer may adopt: [1] student loan assistance through Educational Assistance Programs (or EAPs), and [2] the new qualified student loan matching provision in certain retirement plans."

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Tackling Student Loan Debt: How Employers Can Help

10 pages. "[T]wo student loan management program options are gaining significant attention as they allow employer contributions in different ways: Student loan direct payment program and student loan retirement matching program. [This article describes] these programs in detail to help employers determine the best approach for the organization's objectives and employee demographics."

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Employer Student Loan Debt Benefits Following SECURE 2.0

"[This article] discusses the SECURE 2.0 student loan benefit and other employer options for providing tax-advantaged benefits to employees based on student loan payments. It also examines the open questions and current implementation challenges for sponsors of 401(k) and 403(b) plans hoping to implement the student loan benefit."  MORE >>