In Notice 2024-63, the IRS provides Q&A guidance to help retirement plan sponsors implement qualified student loan payment (QSLP) match programs for their employees. The SECURE 2.0 Act allows employers to make matching contributions toward QSLPs under a 401(k), 403(b) or governmental 457(b) plan under certain conditions.
Below are key points from the Q&As on QSLP design and eligibility rules, employee certification requirements, actual deferral percentage (ADP) testing and match procedures.
A QSLP is a repayment made by an employee of a qualified education loan incurred by an employee for certain higher education expenses. For a qualified education loan to be treated as incurred by an employee, the employee who makes the payment on the loan must have a legal obligation to make the payment. A cosigner has a legal obligation to make payments under the terms of a loan, but unless the primary borrower defaults under a loan, a guarantor does not (Q&A A-1).
No, a plan may not limit QSLP matches to only certain qualified education loans, such as loans for an employee’s own education, for a particular degree program (e.g., an M.B.A.) or for attendance at a particular school (Q&A A-4).
Generally, yes. A plan with a QSLP match feature may not exclude employees from receiving QSLP matches if those employees are eligible to receive elective deferral matches, and vice versa. Although the uniformity requirement generally applies to all employees covered by a plan, the Internal Revenue Code (IRC) disaggregation rules apply. Thus, for example, a plan may include a QSLP match feature that applies only to non-collectively bargained employees but not collectively bargained employees (Q&A A-5).
The QSLP limit for 401(k) and 403(b) plans is the same as the amount of elective deferrals that the employee could contribute under IRC section 402(g) ($23,000 for 2024, plus catch-up contributions) or the employee’s IRC section 415 compensation (if less), reduced by the employee’s elective deferrals for the year.
The QSLP limit for 457(b) plans is “the amount that is subtracted from the limitation applicable under section 402(g) (or, if lesser, the employee’s compensation as described under section 415(c)(3)).” Presumably any employer contributions related to the 457(b) plan would need to be subtracted from this limit, although the notice is not clear.
QSLP matches can be contributed at a different frequency than elective deferral matches, but the QSLP matches must be contributed at least once a year (Q&A E-3). Plans may elect to provide for contributions of QSLP matches on a rolling basis as employees submit QSLP claims (Q&A E-5).
Yes, provided that the notice and election opportunity conditions in Notice 2016-16 are met. Further, a midyear change to a safe harbor plan to add a QSLP match feature is not a prohibited midyear change as described in Notice 2016-16 (Q&A E-2).
The employee making the qualified education loan payment must certify annually to the employer making the matching contribution that payment has been made on the loan. A plan may require a separate certification that each qualified education loan payment satisfies the requirements to be a QSLP or permit an annual certification that applies for all loan payments for a year (Q&A B-1).
The plan or the plan’s third-party service provider must receive the following information (Q&A B-2):
The certification requirement for any required item of information may be satisfied through affirmative certification by the employee.
For items 1, 2 and 3 above, the following alternative certification methods are available:
Items 4 and 5 above can be certified only through affirmative certification by the employee. One method of satisfying the affirmative certification requirement for items 4 and 5 is through loan registration whereby an employee provides information about items 4 and 5 to the plan before the first loan payment is made for which the employee claims a QSLP match.
Information about items 1, 2 and 3 must be submitted annually to a plan. Information about items 4 and 5 does not need to be submitted annually if the employee provides it when registering the loan with the plan before the first loan payment is made (Q&A B-3).
A plan may reasonably rely on an employee’s annual certification without requiring any supporting verification (Q&A C-3).
Under SECURE 2.0, a plan may apply ADP testing separately to employees who receive matching contributions on QSLPs. This permits a plan to apply a single ADP test for all employees or a separate ADP test for employees who receive QSLP matches and a main ADP test that includes employees who do not receive QSLP matches (Q&A D-1).
Plans that apply the ADP test separately may use one of two methods. For both methods, employees who are tested separately include all employees who receive QSLP matches, without regard to whether they also make elective deferrals.
A plan may establish a QSLP match claim deadline that is earlier than three months after the close of each plan year provided that each deadline is reasonable based on all relevant facts and circumstances (Q&A C-2).
Plan sponsors interested in offering a QSLP match (or those that already do so) should review the guidance with their plans’ recordkeepers. Any necessary plan amendment would not be required until December 31, 2026, at the earliest.
Notice 2024-64 applies for plan years beginning after December 31, 2024. For plan years beginning before 2025, a plan sponsor may rely on the guidance in Notice 2024-64 as a good faith, reasonable interpretation of the SECURE 2.0 Act QSLP provision.
