Secure 2.0 Act: Student loan payments will count toward 401(K) matching contributions

The newly signed Secure 2.0 Act will allow employers to count student loan payments toward matching 401(k) retirement contributions.

Last week, President Joe Biden signed the Secure 2.0 Act into law, which not only created changes to retirement savings plans but also impacted student loan payments. 

Beginning in 2024, the Secure 2.0 Act will allow employers to provide their employees with 401(k) contribution matches based on their workers’ student loan payments. In other words, student loan payments can be treated as elective deferrals or employee 401(k) contributions and therefore applicable to a company’s matching policies. 

The rules behind company 401(k) matches vary across different plans. But a company typically matches a percentage of an employee’s contributions up to a maximum amount per year. 

For example, some companies may match 50 cents for every $1 employees contribute to their 401(k)s up to 6% of their salaries. So for people making $60,000 a year, 6% of their salaries is $3,600. If they made this much in student loan payments each year, their employers will now be able to invest $1,800 in their 401(k) accounts.

The law allows companies to make 401(k) matching contributions based on employees' student loan payments, even if the workers don’t contribute directly to their own 401(k) plans. 

If student loan debt is getting in the way of saving for retirement, consider refinancing your private student loans for a lower interest rate. Visit Credible to get your personalized rate in minutes without affecting your credit score.

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State of the student loan crisis

Student loan debt is a burden for many Americans and totaled more than $1.6 trillion as of September 2022, according to data by the Council on Foreign Relations.

The average student loan payment is an estimated $460, according to For many, these payments can prevent them from saving for retirement or investing as much as they can toward retirement savings. 

In fact, 84% of American adults said student loans are negatively impacting how much they can save for retirement, according to research sponsored by TIAA and conducted by the MIT AgeLab.

"When you know you should be saving for retirement but are mired in debt, it can feel like an either/or choice," TJ Donovan, Morgan Stanley at Work executive director, said in a statement. 

However, the Secure 2.0 Act could make it easier for Americans paying off student loans to have retirement savings funds through the help of their employers.

"Section 110 is intended to assist employees who may not be able to save for retirement because they are overwhelmed with student debt, and thus are missing out on available matching contributions for retirement plans," the Secure 2.0 Act brief stated. 

If you’re having trouble saving for retirement because of student debt, consider refinancing at a lower interest rate to lower your monthly payments. Visit Credible to compare loans from different lenders without affecting your credit score.

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Secure 2.0 summary 

The Secure 2.0 Act is a follow-up to the Secure Act, which was signed into law in 2019. Secure 2.0 is designed to make other significant changes to the retirement plan system. 

Here are some highlights to Secure 2.0

  • The required minimum distribution (RMD) age will increase to 73 and then to 75 in 2033.
  • Catch-up contributions toward most workplace retirement plans will increase to $10,000 for employees between the ages of 60 through 63, beginning in 2025
  • Auto-enrollment into 401(k)s and other workplace retirement plans would become a requirement, beginning in 2025.
  • Part-time employees who have worked for at least two consecutive years with at least 500 hours of annual service will be eligible to enroll in their employer’s 401(k) plans.

The Secure Act 2.0 is part of the $1.7 trillion omnibus spending package that was passed at the end of 2022. 

"The passage of SECURE 2.0 is an important step in increasing Americans’ ability to improve their financial security," Maurice Perkins, Transamerica chief corporate affairs officer, said in a statement. "We have been long-time, strong advocates for policies that help American workers increase their retirement savings and financial health. Transamerica leaders have worked with Congress and firmly backed bipartisan legislative efforts to make saving for retirement easier and more effective for both employers and their employees."

If student loan payments are getting in the way of your retirement savings strategy, you can consider refinancing your private student loans into a lower rate. You can visit Credible to see if this option is right for you.

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