Maryland senior U.S. Senator, Ben Cardin, is sponsoring bipartisan legislation to allow employer-sponsored 401(k), 403(b) and SIMPLE retirement plans to make matching contributions for an employee’s student loan payments as if the loan payments were salary reduction contributions to the retirement plan.
The Retirement Security & Savings Act (S. 1431), sponsored by U.S. Senators Ben Cardin and Rob Portman, includes a broad set of reforms designed to strengthen Americans’ retirement security. One such reform aims to help workers who cannot afford to both save for retirement and pay off their student loan debt. Under the bill, these individuals would continue to make student loan payments, but would also receive employer matching contributions.
According to JD Supra:
These bills seek to codify last year’s Internal Revenue Service private letter ruling (PLR) that permitted a 401(k) plan to make matching contributions tied to an employee’s student loan repayments.
The PLR allowed an employer to amend its 401(k) plan to add a new student loan repayment program. Under the terms of this program, if an employee enrolls in the program and makes a student loan repayment equal to a specified amount of his/her eligible compensation per pay period, the employer will make a non-elective contribution to the plan in an identical amount as the employer matching contribution.
Stay tuned to Conduit Street for more information.