The IRS recently released long-awaited rules that provide employers with clarity on how to implement a popular new 401(k) plan feature: matching contributions for employee student loan payments.

This new IRS notice comes after changes made last year under the SECURE 2.0 Act allowed companies to match 401(k) contributions and student loan payments dollar-for-dollar.

Who Can Offer Matches?

The guidance confirms that 401(k), 403(b), SIMPLE IRA, and governmental 457(b) plans can all incorporate student loan match programs. Nearly 10% of employers already provide some sort of student loan repayment benefit, according to an industry survey. Experts predict more companies will add loan-matching given recent updates.

How Much Can Employees Receive?

For 401(k) and 403(b) plans, total yearly student loan matches per employee are capped at $22,500 for 2024 — the same limit as regular 401(k) contribution matches. The limit is slightly lower for SIMPLE IRAs. Additionally, across all plan types, student loan matches cannot exceed an employee’s annual compensation.

Match Requirements

The IRS outlined several requirements to align 401(k) matches and student loan matches. First, companies must provide both types of matches at the same percentage rate. For example, a 50% match on 401(k) contributions up to 6% of pay must also apply to 6% of student loan payments.

Additionally, all employees eligible for 401(k) matches must receive eligibility for loan matches. The guidance prohibits excluding individuals based on factors like employer, division, or college degree program.

Administrative Procedures

The notice permits employers to develop reasonable procedures to claim and substantiate matches, such as quarterly submission dead-lines. However, companies cannot impose overly restrictive policies that prevent individuals from obtaining the benefit.

Verification requirements are also flexible. The IRS said plan administrators may rely solely on an employee’s annual certification that their loan and payments meet eligibility criteria. Additional documentation can be requested but not mandated.

Testing Relief

For 401(k) plans, the new guidance allows two alternatives for passing annual non-discrimination testing when offering both contribution and loan matches. The options provide flexibility based on differing financial behaviors of highly and non-highly compensated employees.

For more Employee Benefits resources, contact INSURICA today.

Copyright © 2024 Smarts Publishing. This is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. 

About the Author

INSURICA
INSURICA

Share This Story

Stay Updated

Subscribe to the INSURICA blog and receive the latest news direct to your inbox.

Related Blogs

Group Health Premiums on the Rise: What Employers Need to Know

September 8th, 2025|Blog, Employee Benefits, Trending|

In 2025, rising group health premiums are becoming a central concern for employers. Carriers like UnitedHealth, Anthem, and CVS Health have issued projections showing significant cost increases—driven by escalating claims severity, specialty drug costs, and continued labor shortages across provider networks.

SECURE 2.0 Implementation: A New Era in Retirement Planning

September 5th, 2025|Blog, Employee Benefits|

The SECURE 2.0 Act, passed in late 2022 and now in active rollout through 2025, is reshaping the landscape of workplace retirement planning. Designed to expand access, modernize plan design, and improve financial preparedness, the law introduces over 90 new provisions—many of which are now surfacing in HR departments across the country.

Visitor Check-In and Access Control Best Practices

August 27th, 2025|Blog, Education|

Visitor check-in and access control best practices are essential for ensuring campus safety. With increasing security concerns in schools, implementing visitor check-in and access control best practices helps minimize unauthorized access, protect students and staff, and ensure a safe learning environment.

Go to Top