An increasing number of 401(k) plan sponsors are (finally) getting around to implementing the innovative student loan matching provision offered under SECURE Act 2.0. Of note, Fidelity has recently implemented this feature LVMH, News Corp., Sephora, and Walt Disney Co., according to a recent article from PLANSPONSOR.
Under this provision of SECURE Act 2.0, employers can now offer a matching contribution to employees who are repaying their student loans, mirroring the structure of traditional 401(k) matching contributions. Employees who choose to allocate funds towards their student loan payments can still benefit from employer matching contributions, fostering a dual approach to financial wellness.
The implementation of the student loan matching provision comes at a critical time when student loan debt in the United States is at an all-time high. To that end, many commentators view the implementation of this provision as a win-win for both employers and employees. For employers, it enhances their ability to attract and retain top talent by offering a unique and valuable benefit. Moreover, it demonstrates a commitment to employee financial well-being, which can improve morale and productivity. For employees, it provides a powerful tool for managing student loan debt while simultaneously building toward a secure retirement.
Many plan sponsors are aware of this provision under SECURE Act 2.0, but have been waiting for recordkeepers to get acclimated to the concept and let other employers be the “guinea pig” for implementation. Now that larger plan sponsors such as Disney and NewsCorp are beginning to implement this provision, the hope is that many other employers will join the trend to help employees address the dual challenges of student loan debt and retirement savings.
