Student Loan Payments for Matching Contributions

Beginning in 2024, student loan payments can be treated as retirement contributions for the purpose of qualifying for matching contributions in a workplace retirement account. Employers will be able to make contributions to their company retirement plan on behalf of employees who are paying student loans instead of saving for retirement. Employers may rely on the employee to certify annually the amount of their qualifying student loan payments.



In a student loan matching program, employers can match employee contributions to a qualifying retirement savings plan after the employee makes a qualified student loan payment. Employers can match contributions dollar-for-dollar or up to a certain percentage of the employee’s annual pay. For example, some companies may require employees to contribute at least 2% of their annual pay toward student loans to qualify for a 5% match. 



What are the benefits of the student loan matching program?


Employees can pay down student debt while also saving for retirement. This can improve their overall financial well-being and reduce stress associated with managing both student loans and retirement separately. The program can also increase employee participation in their retirement plan. 



The student loan matching program does NOT:



– Reduce income tax

– Reduce student loan debt

Here are step-by-step instructions for setting up and making student loan payments eligible for matching contributions, such as employer matching programs:

Step 1: Verify Employer Program

  1. Check Employer Policies: Confirm that your employer offers a matching contributions program for student loan payments.
  2. Review Program Details: Understand the specifics of the program, including eligibility criteria, matching percentages, and contribution limits.
    


Step 2: Enroll in the Program

  1. Contact HR or Benefits Department: Reach out to your human resources or benefits department for guidance on enrolling in the program.
  2. Complete Required Forms: Fill out any necessary enrollment forms provided by your employer.
  3. Provide Loan Information: Submit documentation of your student loan(s), including loan account numbers and payment details.

Step 3: Set Up Payments

  1. Determine Payment Method: Decide whether to set up automatic payments or make manual payments.
  2. Set Up Automatic Payments (if applicable): Log in to your loan servicer’s website and set up automatic payments from your bank account.
  3. Schedule Manual Payments (if applicable): Mark your calendar or set reminders to make timely payments manually.

Step 4: Coordinate with Employer

  1. Provide Payment Proof: Submit proof of payment to your employer as required, such as payment receipts or bank statements.
  2. Follow Up on Matching Contributions: Ensure your employer has processed the matching contributions and they are applied to your student loan or retirement account as per the program guidelines.

Step 5: Track Your Payments and Contributions

  1. Monitor Loan Statements: Regularly check your student loan statements to verify that payments and matching contributions are accurately credited.
  2. Keep Records: Maintain a record of all payments made and matching contributions received for future reference and potential tax purposes.

Step 6: Adjust as Needed

  1. Review Program Changes: Stay informed about any changes to your employer’s matching contributions program.
  2. Update Loan Information: Notify your employer of any changes to your student loan details, such as loan servicer changes or loan consolidation.

By following these steps, you can effectively manage your student loan payments while taking advantage of your employer’s matching contributions program to increase your retirement savings.