Student loan retirement matching is a benefit, established by Section 110 of the SECURE 2.0 Act, that allows your employer to contribute to your retirement account based on your student loan payments. This means you can receive employer matching contributions to your retirement account even if you're not actively contributing to the plan yourself.
This benefit addresses a common challenge: having to choose between paying off student loans and saving for retirement. Instead of making that difficult trade-off, you can now receive retirement matches while focusing on paying down your student debt.
Here's what you need to know:
- Your employer will deposit match contributions directly into your retirement account
- Match calculations include both retirement contributions and student loan payments together
- You can combine student loan payments and contributions to your retirement plan up to your plan's maximum limits
- This benefit does not provide additional matching beyond your plan's normal limits - it simply allows you to receive the match you might otherwise miss out on due to student loan payments
Let's look at how this works in different scenarios:
If you're not currently contributing to your 401(k):
Consider an employee making $50,000 annually at a company that matches up to 4% of salary. If the employee pays $200 monthly toward student loans but can't afford 401(k) contributions, they can now receive up to $2,000 in annual retirement matches based on those loan payments - money they would have otherwise missed out on completely.
If you're contributing but not maximizing:
Take someone making $50,000 who is eligible for a 4% match but contributes 2% to their 401(k), receiving a $1,000 match. If they also make $200 monthly student loan payments, these payments can help them secure the remaining $1,000 match they were missing, bringing them to the full 4% match without increasing their retirement contributions.
If you're already maximizing your match:
For employees already contributing enough to receive their full match (in this example, 4% of $50,000), the student loan matching benefit confirms they're on the right track balancing debt repayment and retirement savings. Their retirement contributions remain the same since they're already receiving the maximum match.
When will I receive my match and how much will it be?
The timing and amount of your match will depend on your employer's specific retirement plan rules and payment schedule. Every employer's plan is different, so check with your HR department to understand:
- Your specific matching formula
- Payment schedule for matches (quarterly, annually, or other)
- Any requirements or limitations specific to your plan
- How student loan payments and retirement contributions work together under your plan's rules
If you have access to Summer through ADP, you will receive the match you’re eligible for once per year at the end of your plan year. If your plan year runs from January to December, you’ll have until the end of the following January to verify your payments from the previous year, then you’ll receive the match into your account shortly after.