Here's a number that should stop most small business owners mid-scroll: roughly 42 million Americans carry federal student loan debt, and a large share of them are in their prime working years — the same years they're supposed to be building retirement savings. For a lot of employees, it's one or the other. Pay down the loan, or fund the 401(k). Rarely both.
SECURE 2.0's Section 110 was written to fix exactly that trade-off. Since plan years beginning after December 31, 2023, employers have been allowed to make matching contributions to an employee's 401(k), 403(b), SIMPLE IRA, or governmental 457(b) plan based on the employee's student loan payments — not their retirement contributions. An employee who can't afford to defer a dime into their 401(k) because every spare dollar is going to Great Lakes or Nelnet can still walk away with the full employer match, as if they'd been contributing all along.
It sounds like an easy win for recruiting and retention, especially if you employ recent graduates, healthcare workers, teachers, or anyone else who tends to carry five- and six-figure loan balances. And yet, despite the provision being available for two full plan years now, adoption has been strikingly low — somewhere around 2–3% of 401(k) plans, according to recent industry surveys. If you're a small business owner weighing whether to add this benefit, here's what the rule actually requires, why so few employers have pulled the trigger, and what the calendar is forcing you to decide before the end of 2026.
What Counts as a "Qualified Student Loan Payment"
A Qualified Student Loan Payment (QSLP) is a payment an employee makes during the plan year toward a "qualified education loan" — one used to pay for the employee's own higher education, or that of a spouse or dependent. The loan doesn't have to be a federal loan; private student loans qualify too, as long as they were used for qualified higher education expenses.
A few mechanical points matter for how you administer this:
- The combined limit is one limit. QSLPs and elective deferrals share the same annual ceiling under IRC Section 402(g) — $24,500 for 2026, plus a $8,000 catch-up for employees 50 and older (or the new $11,250 "super catch-up" for those turning 60–63 in 2026). An employee can't stack $24,500 of loan payments on top of $24,500 of 401(k) deferrals and get matched on both; the two are added together against the same cap.
- The match must mirror your existing match — no exceptions. If you match elective deferrals dollar-for-dollar up to 4% of pay, the QSLP match has to use the identical formula, the identical vesting schedule, and be made at the same frequency. You can't offer a richer match for loan payments to make the benefit more attractive, and you can't offer a stingier one to control cost.
- Eligibility has to be symmetric. Any employee eligible for the regular elective-deferral match must also be eligible for the QSLP match, and vice versa. You can't carve out a QSLP-only benefit for one group and a deferral-only match for another.
- SIMPLE IRAs work a little differently. The QSLP ceiling for a SIMPLE IRA is based on the SIMPLE's own contribution limit rather than the 402(g) limit, and the nondiscrimination testing relief described below doesn't apply to SIMPLE plans at all — SIMPLE IRAs already operate under their own testing-free structure.
What the IRS Actually Clarified in Notice 2024-63
Section 110 itself left plan sponsors with a lot of open questions about how to run this day to day. In August 2024, Treasury and the IRS answered most of them in Notice 2024-63, a question-and-answer notice that applies to plan years beginning after December 31, 2024 (for the 2024 plan year itself, sponsors could rely on a good-faith, reasonable interpretation of the statute).
The most consequential answer for a small employer is about certification. You are allowed to accept an employee's self-certification that a payment was made, in the amount claimed, toward a qualified education loan — you are not required to independently verify the loan through the servicer. At the same time, the notice explicitly permits you to layer on additional reasonable procedures if you want more assurance: requiring an annual certification form, requiring the loan payment to be made via payroll deduction so you have your own record of it, or asking for supporting documentation periodically. You get to choose where on that spectrum you want to sit, and you can build that choice around what your payroll or 401(k) recordkeeper can actually support.
The notice also addressed nondiscrimination testing — a real concern, since QSLP matches by definition tend to flow to younger, lower-tenure employees who are less likely to be highly compensated. Employers get relief allowing a QSLP-match-eligible population to be tested separately for ADP (Actual Deferral Percentage) purposes under certain conditions, which keeps a loan-match feature from accidentally blowing up your existing nondiscrimination testing results. That relief is a genuine administrative gift; without it, adding this benefit could put your entire plan's testing at risk.
Why So Few Employers Have Adopted It — And Why That's Changing
If the tax mechanics work and the IRS has answered the open questions, why are only 2–3% of 401(k) plans actually offering a QSLP match? Two practical frictions keep coming up in surveys of plan sponsors and recordkeepers:
- Recordkeeping systems weren't built for this. Most 401(k) platforms are built to track deferrals coming out of payroll, not loan payments made to a third-party servicer. Even with self-certification allowed, someone still has to collect the certifications, calculate the match, and feed it into a payroll run on a schedule the recordkeeper can process — and as of 2024, a lot of major recordkeepers still had bespoke or manual workarounds rather than native support.
- Employers want more assurance than the statute strictly requires. Even though the IRS says self-certification is enough, many plan sponsors have said in industry polling that they're uncomfortable matching contributions to something they can't independently confirm is real, and they'd prefer an automated, verified process over an honor system — which pushes them toward waiting for third-party verification tools to mature rather than adopting on day one.
Neither of those frictions is permanent. Abbott Laboratories ran a private-letter-ruling version of this exact benefit — its "Freedom 2 Save" program — starting in 2018, years before Section 110 existed, and used it successfully as a recruiting differentiator in a competitive labor market. Payroll and recordkeeping vendors have spent the two years since Notice 2024-63 building purpose-built certification and matching workflows specifically because demand from mid-size and small employers has been rising. If you ask your current 401(k) provider or payroll company today, there's a much better chance they can turn this on with a form and a plan amendment than there was in 2024.
The Deadline That Actually Forces a Decision
Here's the piece of this that turns "someday" into "this year." Under IRS Notice 2024-2, the deadline to formally amend your plan document for most SECURE 2.0 provisions — including a QSLP match feature, if you've been operating one — is December 31, 2026, for calendar-year plans that aren't collectively bargained or governmental. Miss that deadline and you lose the anti-cutback relief that let you operate the feature informally in the meantime; the amendment has to be adopted on time to be treated as effective as of the date you started administering it.
Practically, that means:
- If you're already offering an informal or good-faith QSLP match, you need a formal plan document amendment finalized before the end of 2026 — don't assume your TPA will do this automatically without you asking.
- If you're considering adding the benefit for the first time, this year is the natural window to evaluate it alongside your other year-end plan design decisions, since your recordkeeper, TPA, and payroll provider are already coordinating amendments for the deadline regardless.
- If you decide not to add it, you don't need to do anything — this deadline only applies to plans that have adopted or plan to adopt the feature.
Should a Small Business Actually Do This?
The QSLP match is most valuable where two things are true: you employ a meaningful number of people with real student debt (healthcare practices, professional services firms, tech shops hiring recent grads), and your existing 401(k) match is generous enough that "the same match, applied to loan payments" is worth advertising. If your match is a token 1%, the benefit isn't going to move the needle on recruiting. If it's a real 4–6% match, letting debt-burdened employees capture it without deferring a paycheck dollar can be a genuine differentiator in a tight labor market — and it costs you nothing beyond what you're already paying in match dollars, just redirected to a different trigger.
Before committing, have three conversations: with your 401(k) recordkeeper or TPA about whether they support QSLP administration and what certification method they recommend; with your payroll provider about how loan-payment data will actually reach them; and with whoever prepares your plan document about getting the Section 110 amendment queued up well before the December 31, 2026 deadline rather than in a scramble that week.
Keep Your Benefits Decisions Grounded in Clean Books
Whether or not you add a student loan match, decisions like this only make sense when you can actually see what your existing match costs you today — by department, by role, as a percentage of payroll — instead of guessing from a payroll summary. Beancount.io provides plain-text accounting that gives you complete transparency and control over your financial data, so benefit and compensation decisions are grounded in numbers you actually trust. Get started for free and see why developers and finance professionals are switching to plain-text accounting.