The Washington Report
August 28, 2024
Note to Subscribers
While we do our best to provide timely updates, it is possible that the information shared in the newsletter may change after our publication deadline.
Legislative
Congress Adjourned for Summer Recess
Congress has adjourned for its summer recess. The House and Senate are scheduled to reconvene after the Labor Day holiday.
Retirement
IRS Issues Interim Guidance Under Section 110 of the SECURE 2.0 Act With Respect to Matching Contributions Made on Account of Qualified Student Loan Payments
On August 19, 2024, the Internal Revenue Service (IRS) released Notice 2024-63, which provides interim guidance in the form of questions and answers for sponsors of 401(k) and similar retirement plans that provide, or wish to provide, matching contributions based on eligible student loan payments made by their participating employees. The Notice implements Section 110 of the SECURE 2.0 Act of 2022, which permits employers to provide matching contributions for employees based on their payments on student loans. The 2022 legislation permits employers with a 401(k) plan, 403(b) plan, governmental 457(b) plan or SIMPLE IRA plan to provide matching contributions based on student loan payments, rather than based only on elective contributions to retirement plans, in plan years beginning after December 31, 2023. Among other provisions, Notice 2024-63 addresses:
- General student loan matching contribution eligibility rules (including dollar and timing limitations).
- What is required for an employee certification that student loan matching contribution requirements have been met.
- Reasonable student loan matching contribution procedures that a plan may adopt.
- Special nondiscrimination testing relief for 401(k) plans that include student loan matching contributions.
Notice 2024-63 applies for plan years beginning after December 31, 2024. For plan years beginning before January 1, 2025, the IRS states a plan sponsor may rely on a good faith, reasonable interpretation of Section 110 of the SECURE 2.0 Act. The IRS anticipates issuing proposed regulations and is requesting comments regarding the matters discussed in this Notice and on Section 110 of the SECURE 2.0 Act. Comments should be submitted in writing on or before 60 days after publication in the Federal Register.
The news release is available here.
IRS Notice 2024-63 is available here.