SECURE 2.0: Employer Matching on Student Loan Payments

June 6, 2025 | 6-7 Minute Read

One of the roadblocks many Americans face in saving adequately for retirement is not being able to defer earlier in their careers when they are paying back student loans. SECURE 2.0 seeks to alleviate part of that issue by allowing employers sponsoring a 401(k), 403(b), SIMPLE IRA, or 457 plan to treat payments to qualified student loans as plan deferrals for the purpose of employer matching. In other words, an employee who is unable to defer an amount to qualify for the employer’s full match, can use payments made to a qualified student loan in that year to receive part or all of the employer matching contribution to the retirement plan.

When it Becomes Effective

This provision became effective for plan years starting after December 31, 2023.

How it Works

Here is how employers can make a retirement plan matching contribution on an employee’s student loan:

• This is an optional provision and requires a plan amendment to allow the employer to match employee student loan payments.
• The employee’s loan must be a “qualified education loan,” meaning that it was taken solely to pay for the higher education expenses (tuition, room and board, etc.) of themselves, their spouse, or their dependent, for which the employee is legally responsible for paying under the loan’s terms. The loan can be either be a federal loan or a private loan.
• The employee can use any combination of retirement employee deferrals and qualified student loan payments (QSLPs) to qualify for the employer’s matching contribution.
• The QSLPs can only be matched if the payments were made in the same plan year.
• An employee can receive matching contributions on a combination of deferrals and student loan payments, but the sum of deferrals and QSLPs cannot exceed the 402(g) deferral limit for the year ($23,500 for 2025). For example, an employee who defers $10,000 in 2025 can use an additional $13,500 in QSLPs to qualify for the employer match.
• The employee must be eligible to receive the employer’s matching contribution of their deferrals to be able to receive the employer’s matching contribution on their student loans. Vice versa, any employee eligible for employer matching on their deferrals, must be eligible to receive the match on their QSLPs.
• The matching contribution formula and vesting schedule must be the same for QSLPs as it is for deferrals. For example, an employer who matches 100% on the first 4% of an employee’s compensation that is deferred would also match on 100% on the first 4% of an employee’s compensation that was used on QSLPs.
• The employer may set up a separate source in the plan for matching made on QSLP
• Matching contributions on both deferrals and QSLPs are included in the Actual Contribution Percentage (ACP) test.
• Employers must include the QSLPs that were matched in the Actual Deferral Percentage (ADP) test, but do have the option of testing the employees who receive a match on a QSLP in a separate ADP test.
• The matching contributions for QSLPs can be deposited on a different schedule than the matching contributions that are made on the deferral contributions. For example, a plan that matches employee deferrals on a payroll by payroll basis can elect to only match QSLPs annually to reduce administrative burden.
• In order to match on the QSLPs, there is a certification process that needs to be followed with the employer being provided relief to rely on the employee’s certification. Participants must certify:
  ⦁ The amount of each payment and the date that it was made,
  ⦁ That they, the employee, made the payment, and
  ⦁ That the loan is legally theirs.
• If the loan payments are handled through payroll or a trusted loan servicer, the employer only needs to confirm that the loan is a qualified loan one-time.
• The employer may establish reasonable administrative procedures to handle the matching of QSLPs, such as establishing certain due dates in which certification documentation is made by.

Other Considerations

Prior to adopting, Plan Sponsors should consider the following administrative requirements to provide a matching contribution on Qualified Student Loan Payments:

• This is an optional plan feature, and the plan must be amended to match on QSLPs. Plans intending to adopt this provision can offer this feature now, but the amendment will need to happen by the end of the remedial amendment period (the end of 2026 for non-governmental plans and 2029 for governmental plans).
• The additional administrative burden that offering a match on QSLPs will require should be considered and the plan sponsor should ensure that they have their processes for matching QSLPs documented.
• The cost of the additional match that will be paid to employees who will now qualify for larger contributions should be evaluated.
• Participants will need to receive communications of these added provisions, through the distribution of the Summary of Material Modifications and Summary Plan Description. Your document provider can supply these documents for distribution.
• Notice 2024-63 has provided the interim guidance from the IRS on matching QSLPs. Plan sponsors should be aware that final interpretation of this provision may lead to some changes that they may need to adjust for.

Benefits² Administrators clients: If you have questions about matching qualified student loan payments in your retirement plan, we encourage you to reach out to your dedicated Retirement Analyst. They can help you with the plan amendment process, discuss administrative procedures, and help you stay compliant.

For non-clients or plan advisors seeking guidance: Feel free to contact Leslie Wood (lwood@benefits2llc.com) for additional information and support. Leslie can provide an overview of the SECURE 2.0 student loan payment matching provision, if a plan document needs amended for this provision, or additional strategies for increased retirement savings.

Whether you are a current client or not, our goal at Benefits² Administrators is to ensure every plan sponsor has the knowledge and support to help participants be financially secure during their employment and in retirement.

JP Perryman, QKA

Jeremiah “JP” Perryman, QKA is the Compliance and Operations Manager at Benefits² Administrators.  He has more than 15 years of experience working with qualified retirement plans.