How Student Loan-Related Benefits Could Affect Small Businesses in 2024

The SECURE 2.0 Act, passed in December 2022, brought a game-changer for student loan-related benefits in the workplace.

This provision will be a massive change for all businesses but will significantly impact small businesses. Here's how the new student-loan-related benefits will affect businesses in 2024:

New Opportunity: Matching Contributions for Student Loan Payments

Employers can now offer matching contributions in retirement plans based on employees' qualified student loan payments (QSLPs). This means that while employees are working on paying off their student loans, employers will be able to make matching contributions to employees' retirement savings. This benefit is optional; businesses can choose whether to offer this benefit, but the option is available now.

Potential Benefits for Businesses

Those who are early adopters of this employee benefit will have a leg up on the competition regarding benefits-related offerings, especially to millennials and Gen Z. This provision impacts predominantly those who are early in their career path and still have student loans. Programs like this can help to attract and retain talented individuals who may have larger student loan debt. It can also help boost employees' morale because they believe that their employer is seeking to help them with what impacts employee stress the most. Showing a commitment to your employee’s financial wellbeing can go a long way in showcasing your organization's emphasis on employee benefits and retention.

Considerations For Offering this Benefit

Businesses that decide to integrate this benefit into their existing benefits offerings need to consider the potential administrative costs. Offering matching contributions will create additional costs for the company. Other considerations would include tax implications. There are some tax reimbursement programs available that can offset the cost. But please consult with your retirement plan adviser or tax professional to understand the tax implications of offering this benefit.

Why It’s Important for Small Businesses to Understand This Benefit

As a small business, you are working against a multitude of factors that make offering employee benefits difficult. They can be expensive and be a huge administrative burden. But the potential outcomes/results of fortified benefits offerings with a new benefit being available can make a big difference for your business. There is a growing interest and awareness of financial independence, and offering student loan-related benefits such as matching retirement contributions can help you stand out from your competition. In 2024, we expect to receive some regulatory guidance from the IRS on QSLPs and how they should be attributed to retirement plans throughout 2024.

SECURE 2.0 has dramatically impacted retirement and will continue to have a lasting impact on retirement outcomes in the United States. The provision to introduce student loan repayment programs within your retirement plan can ultimately have two impacts on your retirement future simultaneously that were previously not possible. Save for retirement while you pay off your loans. Connecting these together could be a significant factor in allowing younger employees to get out of debt and start saving sooner. (stat around young employees being in debt.) This new provision, now available in 2024, could be one of the greatest things you can do to endear yourself to your employees and make a lasting impact on their retirement savings.

If you want to implement a student loan program, please get in touch with a retirement plan adviser today!

Are you interested in learning more about SECURE 2.0? Check out our webinar: The SECURE 2.0 Provisions that Could Affect Your Plan in 2024.

Investment advice offered through OneDigital Investment Advisors LLC, an SEC-registered investment adviser and wholly owned subsidiary of OneDigital.