ERISA Committee Wants More Guidance From IRS on Student Loan Matching

ERIC makes the request after guidance the IRS gave this summer.

The ERISA Industry Committee is looking for more guidance from the IRS on how retirement plan sponsors can satisfy non-discrimination testing and other specific “unanswered questions” to help plan sponsors implement the student loan match program now permitted under the SECURE 2.0 Act of 2022.

On Friday, ERIC submitted a letter requesting additional technical guidance from the IRS to further help defined contribution plan sponsors provide employer matching contributions to retirement plans, based on a participant’s qualified student loan payments. ERIC referenced “several unanswered questions” about how the Department of the Treasury and the IRS would interpret Section 110 of SECURE 2.0.

The comment period on the August IRS notice, which applies to plan years beginning after December 31, 2024, ends Friday.

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First, ERIC urged the IRS and Treasury to publish model amendments—either as a follow-on notice or as a proposed regulation—to provide specific language that plans should include about satisfying non-discrimination testing. ERIC asked the IRS and Treasury to also provide model certification language that plan sponsors can use for employees to certify their qualified student loan payments.

In particular, ERIC asked that forthcoming regulations confirm that a plan sponsor has the flexibility to use either the actual deferral percentage test described in the notice each year or an alternative method, if needed, during plan year testing.

Certification Requirements

In addition, ERIC requested additional guidance on certification requirements that would qualify student loan borrowers to receive a matching contribution to their defined contribution plan accounts.

The August guidance from the IRS laid out five elements a plan must receive to certify the student loan payments:

  1. The amount of the loan payment;
  2. The date the loan payment was made;
  3. That the payment was made by the employee;
  4. That the loan being repaid is a qualified education loan and was used to pay for qualified higher education expenses of the employee, the employee’s spouse or the employee’s dependent; and
  5. The loan was incurred by the employee.

Any of the items can be satisfied though “affirmative certification” by the employee, according to the IRS. The first three items can also be satisfied by independent verification by the employer.

ERIC requested that any future regulations should confirm that plan sponsors and administrators are allowed to receive information about the amount and date of loan payments either directly from the student loan lender or from a third-party service provider.

Some benefit plans use third-party service providers to provide financial wellness tools to employees, including those with student loans, ERIC noted, and the tools can link student loan information with a retirement plan recordkeeper’s platform.

However, the Department of Education, in interpreting the 2020 Stop Student Debt Relief Scams Act with the goal of reducing fraud, has recently required student loan servicers to prevent access to their data. ERIC argued that this limit on data sharing has hindered third-party service providers from helping verify participant and loan data. An application process for trusted third parties may eventually be implemented but, as of now, has not been.

“This has the potential both to reduce implementation of the matching programs envisioned by Section 110 of the bipartisan SECURE 2.0 Act and to result in worse financial outcomes for plan participants,” ERIC argued in its letter. “It also adds to the burden for plan participants, as they will need to manually certify information that could be certified through the service-providers.”

ERIC urged the Treasury Department and the IRS to coordinate with the DOE and to alert the DOE of the potentially negative consequences of restricting access by third-party service providers.

Clarification on ‘Reasonable Procedures’

In the letter, ERIC also sought examples of “reasonable procedures” that a plan sponsor is permitted to adopt to implement a qualified student loan match feature. Under the IRS guidance, a plan may establish a student loan match claim deadline for a plan year or multiple deadlines for claim submissions, provided that the deadlines are reasonable, based on a facts-and-circumstances test. The IRS specifically noted that a deadline three months after the end of the plan year would be permitted.

As a result, ERIC stated in its letter that the IRS should confirm that a deadline within the first month after the plan year ends is also reasonable. The IRS should also specify the permissible timeframe for quarterly deadlines, as well as any deadlines for contributions made on behalf of terminated employees, ERIC argued.

Overall, ERIC urged that plans be given maximum flexibility in order to facilitate the operation of this plan benefit.

ERIC is a national advocacy organization that exclusively represents large employers that provide health, retirement, paid leave and other benefits to their employees.

Retirement Industry People Moves – 10/18/24

T. Rowe hires for new role as head of insurance; Janney promotes Galvin to Midwest regional director; Simpson Thacher hires new executive compensation and employee benefits partner; and more.

Ben Riley Promoted to Head of Insurance at T. Rowe Price

Ben Riley

Investment manager T. Rowe Price announced the promotion of Ben Riley to head of insurance at the firm, a newly created position, effective January 1, 2025.

Riley will oversee T. Rowe Price’s insurance clients in North America and will report to Doug Greenstein, head of institutional business development for the Americas

“Ben is perfectly suited to take on this important new role,” Greenstein said in a statement. “His extensive experience and dedication have been instrumental in establishing T. Rowe Price within the insurance sector.”

Riley, currently a senior relationship manager servicing insurance clients as part of the institutional client service team, joined T. Rowe Price in 2001. He has also worked in client service and relationship management roles at T. Rowe Price covering pension, defined contribution and other retirement plan service clients.

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“Many of our insurance clients are looking for a partner with scale who has the ability to provide customized fixed-income solutions,” Riley said in a statement. “When you combine the resources of T. Rowe Price with our service-oriented culture and the quality of our credit research platform, it makes us an ideal partner for insurance clients.”

Janney Montgomery Names Tom Galvin Midwest Regional Director

Tom Galvin

Janney Montgomery Scott LLC promoted Tom Galvin to Midwest regional director, starting January 1, 2025, from a role as complex director in Ponte Vedra, Florida, a role in which he assists with adviser growth in the region.

Galvin joined Janney in early 2024 from Raymond James, where he spent 25 years, most recently as divisional director. Galvin is replacing Jim Dornan, who is taking a role as branch leader and financial adviser.

Galvin will oversee Janney’s private client group offices in Ohio, Michigan, New York, western Pennsylvania and West Virginia. He will work with the firm’s advisers to support and develop their practices, as well as recruit.

Dornan will join the adviser team at Janney’s McCoy Wealth Management Group in Ligonier, Pennsylvania, as senior vice president of investments and branch leader, effective January 1, 2025, after more than 12 years as Western regional director.

Simpson Thacher Hires Executive Compensation and Employee Benefits Partner

Gillian Emmett Moldowan

Simpson Thacher & Bartlett LLP has hired Gillian Emmett Moldowan as a partner in the executive compensation and employee benefits practice in its New York office.

She joins from A&O Shearman, where she was global co-head of its compensation, employment and governance group.

Moldowan will advise companies, boards of directors, executives and investors on transaction-related compensation and benefits matters, with a focus on mergers and acquisitions for public companies and private equity firms, as well as initial public offerings and other capital markets transactions. In addition, she will advise on governance, securities laws and disclosure related to public company compensation matters.

Nationwide Retirement Hires New Regional VP for Emerging Markets

John Frisvold

Nationwide Retirement Solutions hired John Frisvold as regional vice president of emerging markets covering Minnesota and Wisconsin; Nationwide’s emerging market covers adviser-sold 401(k) plans with fewer than $25 million in assets.

Frisvold joins the firm from a role as a retirement sales consultant at Alerus. He will report to Rob Kissler, division vice president of emerging markets for the Central region. 

“With nearly two decades of experience in the financial services industry specializing in retirement plans, John brings vast expertise in compliance, plan design, and fiduciary duties to his role,” Kissler said in a statement.

 Nationwide Retirement administers nearly 32,000 retirement plans representing $200 billion in participant assets and 2.7 million participants.

Newton Investment Hires 2 New Senior Leaders

Laura Curtis

Britta Hion

Newton Investment Management, part of BNY Investments, announced the appointments of Laura Curtis as head of global product and marketing and Britta Hion as head of North American distribution, two newly created roles.

“We are delighted to welcome Laura and Britta to Newton,” said Euan Munro, Newton’s CEO, in a statement. “As we look to enhance our footprint as a global asset manager, their combined expertise in leadership, sales and product management, alongside established network relationships, will be invaluable in helping us to continue to deliver our clients’ desired investment outcomes.”

Curtis was chief marketing officer and head of marketing for Europe at Vanguard Asset Management from 2018 through 2022, based in London, and was global chief marketing officer and head of marketing at Jupiter Asset Management. She also held senior marketing positions at AllianceBernstein. Curtis will remain based in London and will report to Munro.

Hion was previously the head of North America distribution at Barings and held multiple roles at BlackRock, most recently as global co-head of the firm’s alternatives client platform. Hion, based in New York, will report to Tjeerd Voskamp, Newton’s global head of distribution.

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