Quick Summary
Since 2024, SECURE 2.0 has allowed 401(k), 403(b), governmental 457(b), and SIMPLE IRA plans to make matching contributions based on employees' qualified student loan payments. The match must use the same rate, eligibility, and vesting as the regular match, and employees must certify their loan payments. IRS Notice 2024-63 provides interim guidance that plans can rely on until proposed regulations are issued. The feature can help employees with student debt, but it adds administrative steps that not every recordkeeper supports.
Picture two employees who started at your company the same year. One contributes 5% of pay to the 401(k) and receives the full employer match. The other sends every spare dollar to student loans, contributes nothing, and receives no match. Both are being financially responsible, but only one is building retirement savings.
SECURE 2.0 gave employers a way to close that gap. Starting with plan years beginning after December 31, 2023, plans can make matching contributions based on an employee's qualified student loan payments, as if those payments were 401(k) deferrals.
How it works
The feature is often called a QSLP match, short for qualified student loan payment. Here is the basic structure:
- The employee pays their student loan as usual, directly to the lender.
- The employee certifies the payment to the plan.
- The employer makes a matching contribution to the employee's 401(k) account, based on the loan payment, at the same rate it matches salary deferrals.
The match goes into the employee's retirement account, not toward the loan. The employee does not have to contribute to the 401(k) to receive it, although they can do both.
What counts as a qualified student loan payment
A qualified student loan payment is a payment the employee makes during the plan year on a qualified education loan used to pay higher education expenses for the employee, the employee's spouse, or a dependent. The employee must be legally obligated on the loan, and the payment must be made by the employee.
For matching purposes, the total of an employee's elective deferrals and qualified student loan payments counted for the match is limited by the annual elective deferral limit. In practice, that limit rarely affects a typical match, but your recordkeeper needs to track it.
The rules for the match itself
The law requires the student loan match to mirror the plan's regular match:
- Same rate. If the plan matches 50% of deferrals up to 6% of pay, it must match student loan payments the same way.
- Same eligibility. Every employee eligible for the regular match must be eligible for the student loan match.
- Same vesting. The student loan match follows the plan's vesting schedule.
The plan can make student loan matches on a different schedule than regular matches, for example once a year instead of each payroll, but they must be made at least annually.
Certification
Employees must certify each loan payment, including the amount, the date, that they made the payment, that the loan is a qualified education loan for themselves, a spouse, or a dependent, and that they incurred the loan.
IRS Notice 2024-63, issued in August 2024, gives plans flexibility here. Plans can generally rely on the employee's certification without collecting additional documentation. Some vendors can also receive payment information directly from loan servicers, which can reduce how often employees need to certify. The notice indicates that an annual certification deadline three months after the end of the plan year is reasonable.
As of this writing, the IRS has said proposed regulations will follow, and plans can rely on Notice 2024-63 in the meantime.
Testing
Student loan matches are tested along with other matching contributions. The IRS guidance also allows a plan to test employees who receive student loan matches separately for the actual deferral percentage test, which can help when those employees have low or no deferrals. Your plan's administrator can tell you whether that option makes sense for your plan.
Practical considerations
Before adding the feature, consider:
- Recordkeeper and payroll support. Many systems are built to track payroll deferrals, not payments to an outside lender. Ask whether your provider supports the feature and what it costs.
- Employer cost. If employees who were not deferring begin receiving a match, total matching contributions will rise. Estimate the impact before adopting.
- Your workforce. The feature tends to be most relevant for employers with many recent graduates or employees in fields that require advanced degrees, such as health care and professional services.
- Plan amendment. The feature must be added to the plan document.
- Communication. Employees need to know the feature exists and how to certify their payments.
Other ways to help with student debt
A student loan match is one option. Employers can also help through an educational assistance program under Section 127 of the tax code, which allows up to $5,250 a year in tax-free employer payments toward an employee's tuition or own student loans. The One Big Beautiful Bill Act of 2025 made the student loan option permanent and provides for the limit to be indexed for inflation after 2026. Some employers combine approaches.
Wondering whether a student loan match fits your workforce? Brian Williams, CPFA®, of Northshire Consulting LLC | Registered Investment Advisory Firm helps business owners evaluate plan features and their costs. Call 203-401-6062, email bwilliams@northshireconsulting.com, or visit northshireconsulting.com to schedule a plan review.
Frequently asked questions
Does an employee have to contribute to the 401(k) to receive the student loan match?
No. The match is based on the employee's qualified student loan payments. An employee can receive it without making any salary deferrals, although they may also contribute if they choose.
Does the matching contribution go toward the employee's loan?
No. The match is deposited into the employee's 401(k) account, just like a regular matching contribution. The employee continues to make loan payments on their own.
Can we offer a richer match on loan payments than on deferrals?
No. The student loan match must be made at the same rate as the match on elective deferrals and must follow the same eligibility and vesting rules.
This material is for educational purposes only and is not individualized investment, tax, or legal advice. Advisory services are offered through Northshire Consulting LLC | Registered Investment Advisory Firm.