Enhance Your Benefits Package with Student Loan Matching Contributions
08/27/2024When unemployment is low, it can be a challenge to attract and retain skilled workers. When weighing offers from potential employers, it is the benefits package that often moves the needle.
One effective – and relatively new – way to enhance employee benefits is by matching student loan payments with retirement contributions. Similar to a 401(k)-contribution match, this strategy allows employers to make retirement contributions based on the employee’s payments towards their student loan debt, rather than their retirement account. This way, employees who can’t think about saving for retirement until their loans are paid off can still start building a nest egg with your help. In the process, you will improve employee satisfaction and retention by demonstrating a commitment to your team members’ financial well-being, fostering a more loyal and engaged workforce.
Created under IRS Notice 2024-63, this strategy can be used for plan years starting after December 31, 2023.
Here’s How It Works:
- Certification is Required: Employees must show proof of their student loan payments to qualify for matching contributions.
- Can Add to Existing Plan: Construction firms can seamlessly incorporate this matching option into their existing retirement plans.
- Simplified Compliance Rules: The IRS included nondiscrimination testing relief for these plans, which means there are fewer compliance hoops to jump through to offer this benefit.
​Matching student loan payments with retirement contributions helps employees manage debt and build savings simultaneously, making it especially appealing to younger workers. Construction company owners and managers should evaluate how these changes can enhance their benefits offerings. Reach out to us if you would like guidance to ensure these updates are smoothly implemented and fully compliant with regulations.