Federal Register: SECURE 2.0 Student Loan Matching & Expatriate List

Lead: IRS Advances SECURE 2.0 Student Loan Matching

The IRS is taking administrative steps to implement a key provision of the SECURE 2.0 Act: allowing employers to match employee contributions to retirement plans based on their qualified student loan payments (QSLPs). The agency is formalizing the paperwork required for employers to offer this highly anticipated benefit under Section 110 of the SECURE 2.0 Act, which amends IRC Section 401(m). This section governs matching contributions to 401(k) plans, 403(b) plans, SIMPLE IRAs, and governmental 457(b) plans. The IRS action comes in the form of an information collection request tied to Notice 2024-63, which provided initial guidance on implementing QSLP matching programs. Separately, the IRS will be publishing its quarterly list of individuals who have lost U.S. citizenship, as mandated by IRC Section 6039G; details on that publication will follow.

Context: The Mechanics of Student Loan Matches

The IRS action addresses matching contributions to 401(k) plans, 403(b) plans, SIMPLE IRAs, and governmental 457(b) plans, specifically amending IRC Section 401(m). The "why" behind this notice stems from SECURE 2.0 Act Section 110, which introduced the concept of "Qualified Student Loan Payments" (QSLPs).

Prior to SECURE 2.0, employers could only match contributions made through employee deferrals. The new rules, however, allow employers to treat student loan payments as elective deferrals for the purpose of making matching contributions. A "Qualified Student Loan Payment" (QSLP) is defined as a payment made by an employee in repayment of a "qualified education loan" incurred to pay for "qualified higher education expenses." These expenses must be for the education of the employee, their spouse, or their dependent. Furthermore, the employee must have a legal obligation to make the payments.

Notice 2024-63, released in August of 2024, provides interim guidance for plan sponsors implementing QSLP match programs. This notice is crucial because it details how employers can operationalize these new matching contributions. Here's how it changes the playing field:

• Old Rule: Employers could only match employee deferrals into retirement accounts.
• New Rule: Employers can also match qualified student loan payments, treating them as if they were deferrals.

Notice 2024-63 addresses several key implementation questions. For example, a plan offering a QSLP match must offer it to all employees eligible for traditional deferral matches and at the same rate. The notice also permits plan sponsors to rely on an employee's annual self-certification that loan payments were made. Importantly, total QSLPs and elective deferrals are combined for the annual IRC Section 402(g) limit, which was $23,000 for 2024 and $23,500 for 2025.

Industry Impact: The Administrative Burden

While the SECURE 2.0 Act provision allowing qualified student loan payments (QSLPs) to be matched within retirement plans, as detailed in Notice 2024-63, offers a valuable benefit to employees struggling with student debt, it also introduces a significant administrative burden for plan sponsors. The IRS estimates a substantial increase in paperwork and tracking requirements.

• Increased Burden Hours: The IRS anticipates an increase of 96,875 hours in the total annual burden for employers due to the QSLP matching provisions. This increase stems directly from the need to track and process employee self-certifications of student loan payments to determine eligibility for matching contributions.
• Increased Number of Respondents: The IRS is increasing the number of respondents to 87,500, reflecting the broader adoption of QSLP matching programs by employers.
• Total Estimated Burden: The estimated total annual burden is 221,125 hours, with 475,000 responses anticipated.
• Time per Response: The estimated time per response is 28 minutes.

What does this mean for plan sponsors? While offering a QSLP match helps employers attract and retain talent by providing a competitive benefit, it comes with significant new tracking and compliance responsibilities. Plan sponsors must develop systems to:

• Collect annual self-certifications from employees regarding their student loan payments. Notice 2024-63 allows plan sponsors to rely on these self-certifications without requiring documentation from lenders.
• Ensure that QSLP matches are offered uniformly to all eligible employees, as mandated by Notice 2024-63, meaning they must be offered to all employees eligible for traditional deferral matches and at the same rate.
• Combine QSLPs and elective deferrals when calculating the IRC Section 402(g) limit, which restricts the total amount an employee can contribute to a retirement plan annually. For 2024, this limit was $23,000, and for 2025, it was $23,500.

In Brief: Quarterly Expatriate List Published

The IRS also publishes a quarterly list of individuals who have chosen to expatriate from the United States. This action is mandated by IRC Section 6039G, enacted as part of the Health Insurance Portability and Accountability Act (HIPAA) of 1996. Section 6039G requires the Secretary of the Treasury to publish the names of all individuals who have lost U.S. citizenship (as defined in IRC Section 877(a) or 877A, covering expatriation tax) or who are long-term residents treated as citizens under Section 877(e)(2), based on information received during the quarter. This list, while revealing, is considered routine transparency data.