The IRS recently released Notice 2024-63, answering questions regarding Section 110 of the SECURE 2.0 Act, which allows employers to contribute to employees' retirement accounts based on their student loan repayments. The guidance provided in notice 2024-63 is intended to assist plan sponsors in implementing QSLP (qualified student loan payment) match programs, providing a framework for employers to offer QSLP matches as a valuable employee benefit while ensuring compliance with existing retirement plan regulations.
Notice 2024-63 provides specific guidance on implementing matching contributions for QSLPs under section 401(k) plans, section 403(b) plans, SIMPLE IRA plans, and governmental section 457(b) plans. The guidance in this notice applies for plan years beginning after December 31, 2024.
The notice addresses key points, such as the definition of a QSLP, which plans may include a QSLP match feature, and an employee’s maximum QSLP for a year. It explains that plan provisions may not limit QSLP matches to only certain qualified education loans, for a particular degree program, or for attendance at a particular school. Additionally, if an employee is eligible to receive elective deferral matches under a plan with a QSLP match feature, they must also be eligible to receive QSLP matches. Similarly, a plan with a QSLP match cannot exclude employees from receiving elective deferral matches because they are eligible for a QSLP. For an employee’s qualified education loan payments to be eligible for purposes of the employee’s QSLP match, they must be made during the plan year for which they are counted.
The notice also provides helpful clarification on the necessary certification process and timing of certification. For example, the fact that the loan is an eligible qualified education loan and that it was incurred by the employee only needs to be certified once per loan rather than annually. It also outlines the administrative procedures a plan may establish for QSLP match programs, including claim deadlines and verification requirements.
The notice addresses additional concerns, such as how the QSLP match rules apply to SIMPLE IRA plans, rules that apply to non-discrimination testing of a plan with a QSLP, when a QSLP match feature may be added as a mid-year change to a safe harbor plan, and when a plan may provide for QSLP matches to be contributed at a different frequency than elective deferral matches.
While this notice provides initial clarity, the Treasury Department and IRS anticipate issuing proposed regulations in the future and invite further comments and suggestions on both this notice and section 110 of the SECURE 2.0 Act.
Please feel free to request a consultation with a member of our team to discuss how your plan might be affected.
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