Bill allowing matching retirement plan contributions for student loan payments floated | #retirement | #elderly | #seniors
A bill allowing workers to make student loan payments while their employers make matching contributions to their defined contribution accounts was reintroduced Thursday in the Senate.
Under the Retirement Parity for Student Loans Act, employers are permitted to make matching contributions to workers’ 401(k), 403(b) and SIMPLE and governmental 457(b) retirement plans as if their student loan payments were salary reduction contributions. “This allows these workers to build their retirement savings even while they are paying down their student loan debt and cannot afford to make their own contributions into the plan,” according to a bill summary.
The bill would amend the Internal Revenue Code of 1986 to permit treatment of student loan payments as elective deferrals for purposes of employer matching contributions, among other purposes.
The benefit applies only to repayments of student loan debt that were incurred by a worker for higher education expenses. A worker must certify the amount of student loan repayments that have been made during a plan year in order to receive the benefit, according to the bill summary.
Americans need to be able to save for retirement, even while repaying their loans, said Sen. Ron Wyden, D-Ore., chairman of the Senate Finance Committee, in an accompanying news release. “While I support student debt forgiveness, it’s important to put every option on the table to relieve this burden for millions of Americans,” he said. “This bill is an important tool in the toolbox.”
Mr. Wyden first introduced the bill in 2019 and similar legislation with introduced in the House in 2020. The current version is co-sponsored by Sens. Maria Cantwell, D-Wash., Sheldon Whitehouse, D-R.I., Sherrod Brown, D-Ohio, and Ben Cardin, D-Md.