At the end of the first quarter of 2023, student loan debt, nationally, constituted nearly 37% of U.S. consumers’ total debt at $1.7 trillion! That’s more than one-third of all consumer debt! The average student loan debt is $37,717. The reasons behind that and any solutions are for another day’s discussion.
Over the past few years, student loan repayments were put on hold as a part of Covid relief. That relief has now ended. Today, my intention is to bring to light something that could be helpful to those that need to start making payments as of October 1st.
Did you know that employers are able to MATCH your student loan repayment and contribute that into your 401K? It isn’t new that employers had the ability to do this. In the past, employers were required to work with the IRS, jump through hoops and red tape to establish if they were qualified to do so at all. As of July of 2023, with the passage of the “Securing A Strong Retirement Act (Secure 2.0)” ALL EMPLOYERS CAN OFFER THIS BENEFIT.
This is a WIN/WIN for employers that choose to offer this benefit.
Employer: The assistance they are offering through this matching contribution is tax deductible. If they offered other loan repayment assistance they would still need to pay tax on that benefit.
Employee: They can focus on paying down that debt and still know that there is money being contributed into their 401K’s for their retirement. They can feel secure in knowing that they don’t have to give up one, for the other.
The legislation allows eligible employees to receive a 401(k) match from their employer, but only if they’re making qualified student loan payments. U.S. companies can’t launch any 401(k) student loan match program until Jan. 1, 2025, when the legislation takes effect.
I firmly believe in “staying in my lane”. I am a realtor and that is my expertise, not financial/retirement advice. My intention is to give you just enough information to be dangerous. I advise you to speak with your financial advisor and your HR departments to find out more information to ask if your employer is offering a benefit like this!