Retirement Regulation

In 2024, a provision in SECURE 2.0 takes effect that provides a new option tying student debt repayments to 401(k) plans but clearly communicating to employees why and how to opt into the new program is key to adoption.

The new legislation represents a landmark in the evolution of retirement planning, benefiting employees in unique situations – facing student debt, saving for college or suffering from domestic abuse.

Starting on January 1, 2024, employers of any size can offer a student loan matching benefit within their company 401(k) or SIMPLE IRA plan, enabling employees to build their retirement savings while making student loan payments.

To stop the "leakage" of retirement cash-outs when employees switch jobs, the Department of Labor proposes new rules regarding fees under SECURE 2.0, which is aimed at expanding auto-portability transactions.

Announced by the administration on Friday, the latest debt relief that affects teachers, nurses and firefighters comes on the heels of an announcement earlier this month fast-tracking the Saving on a Valuable Education (SAVE) plan.

Unlike emergency savings accounts that employers have rolled out over the past few years, these new SECURE 2.0 pension-linked accounts have auto-enrollment but employees must be given the chance to opt out.

The American Retirement Association estimates that 19 million additional workers will gain access to a workplace retirement plan through SECURE 2.0's Starter 401(k) provision alone.

The IRS has issued initial guidance to help plan sponsors implement the new pension-linked emergency savings accounts - and is open to comments in order to limit participant abuse of sidecar account matching contributions.