Interim guidance addresses implementation of SECURE 2.0 section amending definition of matching contribution to include employer contributions to DC plans based on participants’ qualified student loan payments
FOR IMMEDIATE RELEASE
Lexington, KY, September 11, 2024—The National Association of Government Defined Contribution Administrators today announced that it has provided members with counsel-provided response to IRS Notice 2024-63, which provides guidance for retirement plan sponsors regarding matching contributions based on qualified student loan payments by participating employees. NAGDCA is the premier professional association for plan administrators and services providers of government-sponsored defined contribution retirement plans.
The interim guidance addresses several aspects of the implementation of Section110 of SECURE 2.0, which amended the definition of matching contribution under Code section 401(m) to include, for the first time, employer contributions made to 401(k), 403(b), 457(b), and SIMPLE IRA plans based on qualified student loan payments by plan participants.
“Although Notice 2024-63 does not focus on public sector plans specifically, public DC plan sponsors that have been considering matching contributions based on qualified student loan payments should rely on this guidance as they work with their internal teams, third-party administrators, and recordkeepers,” said NAGDCA Executive Director Matt Petersen.
The new SECURE 2.0 rule avoids the nondiscrimination complexities raised by a private letter ruling issued to Abbot Laboratories in 2018. While that private letter ruling approved a nonelective contribution formula designed to mirror a match on student loan repayments, it did not provide nondiscrimination testing relief, (nor clearly apply to safe harbor plans), which hindered adoption of student loan repayment matching among private sector plans and also resulted in the slower development of solutions that could be used by public sector plans.
“In avoiding the nondiscrimination complexities raised by the Abbot private letter ruling, the new SECURE 2.0 rule allows for a true match and provides welcome relief for plan sponsors. And, importantly, enables public sector plan sponsors to enhance participating employees ability to save for retirement while paying off their student loans,” Matt concluded.
ABOUT NAGDCA
NAGDCA provides education, information, and training in all aspects of public plan administration to support members in creating plans that enable secure retirement outcomes for their participants. Additionally, NAGDCA is a co-founder with the Employee Benefit Research Institute of the Public Retirement Research Lab, a retirement industry-sponsored collaborative effort. The PRRL mines data from the PRRL Database, the first-ever database specific to public sector plan- and participant-level defined contribution data, to produce research aimed at enhancing understanding of the design and utilization of public sector defined contribution retirement plans. NAGDCA also conceived National Retirement Security Week to encourage retirement saving among government workers. Through its efforts, National Retirement Security Week evolved into National Retirement Security Month, a national effort to inspire American employees to save adequately for a secure retirement that is observed throughout the retirement industry during the month of October. It has received bipartisan Senate resolution since its conception in 2006. To learn more about NAGDCA, visit https://www.nagdca.org/.
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