Secure 2.0 Act Provision effective January 1st, 2024

Starting in 2024, SECURE 2.0 Act enables employers to contribute to workplace savings plans for employees with student loans. Younger workers, burdened by student debt, often neglect retirement contributions. With the new law, employers can make contributions on behalf of these employees, matching the amount of their annual student loan repayments.

Employers can use this as an opportunity to provide incentives that attract and keep employees. This provision can also help younger workers with student debt start saving for retirement.

Important considerations:

• Contribution must be lower than regular contribution limits

• Employee must be eligible for contributions and verify that payment was made to a qualified education loan

• Contribution can be at a different time than other contributions(i.e. end of year vs. each pay period)

Things to review:

• Do you have an employer match?

• Do you have a tuition reimbursement program?

• Would this benefit you during recruitment?

• How would you educate employees about this benefit?

Emergency Savings:

Employees can set up an emergency savings account through payroll deductions. Annual contribution is limited to $2,500. Then, contributions can stop or be directed to a Roth retirement savings plan.

Withdrawal Provisions

• Participants can withdraw up to $1,000 per year from retirement savings for emergency expenses without having the 10% tax penalty for early withdrawal

• Can be repaid to the plan

• Only 1 distribution allowed every 3 years, unless prior distribution is repaid

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This information is intended for information purposes only. Any reader understands that Apex Benefit Group is not providing legal advice, tax advice, or professional services in this article. This article serves to offer practical information regarding the subject matter and is not a comprehensive resource.

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