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- The Secure Act 2.0, signed into law last year, makes it easier to prepare for retirement when you have student loans.
- Secure Act 2.0 allows employers to match employees' student loan payments with retirement contributions.
- You can use the template below to ask your employer for the new benefit.
On December 29, 2022, President Biden signed Secure Act 2.0, which offers reforms to the current retirement system. Notably, it provides a potential benefit for student-loan borrowers that companies don't currently offer.
Stacey MacPhetres, college financial consultant at Bright Horizons, tells Insider, "Very simply put, what Secure 2.0 allows is for employers to make contributions directly to employees' retirement programs based on the amount of student-loan payments they have."
Services like Bright Horizons specialize in helping employers offer these additional benefits, so it's worthwhile to let your employer know about the existence of these services.
The average monthly student loan payment is $460, according to the Education Data Initiative.
Craig Copeland, the director of wealth benefits research at EBRI, says employees with degrees are usually able to pay down their student loan debt while contributing to retirement accounts at the same time — but workers without a degree tend to have higher student-loan balances than their salaries, and are therefore more impacted by trying to do both.
Section 110 of Secure Act 2.0 "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."
"It allows for employees to begin to focus on retirement while maybe not having the ability to contribute," MacPhetres says.
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How to ask your employer about Secure Act student-loan retirement matches
MacPhetres encourages workers to ask companies whether or not they plan on offering this benefit during the interview process or to bring it up with their HR department.
Here's an email template you can use to ask your employer to start offering Secure Act retirement matches:
Dear [insert your HR contact's name],
I recently learned that employers can offer higher 401(k) or 403(b) contributions to match private or federal student-loan payments.
Section 110 of the Secure 2.0 Act states that employers can start matching their employees' monthly student-loan payments with deposits to their retirement accounts as soon as January 1, 2024.
Offering this benefit comes at no additional tax charge to the employer, and it would boost my retirement savings significantly.
Personally, I have [insert student loan total here] in student loans, and my monthly payments are [insert monthly student-loan payments here]. If I didn't have these student-loan payments, I could contribute more to my retirement each month and use our full retirement plan match.
I'm sure I'm not the only one who feels the pressure of student loan debt, so I wanted to speak up and advocate for the needs of employees at this company.
Will [insert company name here] consider offering this benefit in the future?
Best,
[your name here]
This benefit might already be in the budget — but you still have to ask
Copeland says that employers, depending on the size of the company, usually budget for all their employees to take advantage of their company's full 401(k) match.
Since it's rare for all employees to max out that benefit, there's usually a pool of funds left over at the end of each fiscal year that could potentially be used for Secure Act contributions, Copeland and MacPhetres point out.
In fact, Section 102 of Secure Act 2.0 says small businesses with up to 50 employees can receive an additional credit of up to $1,000 per employee per year.
MacPhetres has worked with many companies to set up the necessary back-end processes to offer student-loan repayment and matching benefits. "Employers either know about it and want to know exactly what they need to do to get it queued up, or they don't know about it," she says.