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SECURE Act 2.0: A Provision That Impacts the Most

With 90 provisions make up SECURE Act 2.0, some of which are major, a few of which are minor, required, optional, retroactively effective, and won’t take effect for many years.

The ability for employers to make matching contributions based on student loan repayment is an optional provision that is likely to be very popular with some employers according to an article published by JDSupra on January 18, 2023.

The following points should be taken into account:

(1) The provision won’t go into effect until 2024; (2) It is up to the employer to decide whether to change its plan to offer matching contributions based on student loan repayment; (3) This provision applies to deferral-based plans; (4) A scheme must treat the QSLP matches similar to matches on participant deferrals; (5) Employee certification of payment is reliable for employers.; (6) A plan has the option to test matching contributions as part of its general discrimination testing or as a separate group made up only of individuals who received matches as a result of payments on QSLPs; (7) Student loan repayments are not considered plan contributions.; (8) Regulations allowing the QSLP matches to be made less frequently than regular matches, but not less frequently than annually, may be issued by the IRS and Treasury Department.; and lastly, (9) IRS and Treasury are permitted to publish models of plan amendments for QSLP matches.

Before the start date of deferrals for QSLP matching, if an employer chooses to offer this option to its qualified employees, there must also be an employee education program.

This is merely one of the SECURE Act 2.0’s optional clauses. One feature of optional provisions is that plan sponsors must be informed about the new opportunities, as well as their benefits and drawbacks.