SECURE 2.0 Section 110 Guide 2026: 401(k) Matching on Student Loan Payments

What Is SECURE 2.0 Section 110?

Section 110 of the SECURE 2.0 Act of 2022 (enacted as Division T of the Consolidated Appropriations Act, 2023, Pub. L. 117-328, signed December 29, 2022) lets employers treat an employee's "qualified student loan payments" (QSLPs) as if they were elective deferrals to the employer's defined-contribution retirement plan for purposes of the employer matching contribution.

The practical effect is profound: an employee who is paying down student debt and cannot afford to also defer salary into the company 401(k) no longer has to choose. Their loan payments themselves trigger the employer match, which goes into the 401(k), building retirement savings even while the employee pays down education debt.

Effective Dates and Plan Year Application

Section 110 is effective for plan years beginning after December 31, 2023. For calendar-year plans, this means it has been available since plan year 2024. As of 2026, it is in its third full plan year, and adoption is accelerating now that the IRS has issued operational guidance through Notice 2024-63.

How a Qualified Student Loan Payment (QSLP) Match Works

A QSLP is a payment made by an employee during a plan year on a qualified education loan (as defined under IRC §221(d)) incurred by the employee to pay qualified higher education expenses for the employee.

Mechanics:

1. The employee makes a payment on their own qualified education loan.
2. The employee certifies the payment to the employer.
3. The employer treats that payment, up to the elective-deferral limit (the IRC §402(g) limit, $23,500 in 2025, with future indexing), as if it were a 401(k) elective deferral.
4. The employer applies its same matching formula to the QSLP that it applies to actual 401(k) deferrals.
5. The matching contribution is deposited into the employee's 401(k) account.

The employee receives no taxable benefit from the QSLP itself (it's their own loan payment), but they do receive the employer match, which is contributed pre-tax to the retirement plan in the normal manner.

Example

An employer matches 100% of the first 5% of compensation deferred. An employee earning $80,000 annually pays $5,000 per year on their student loans but contributes $0 to the 401(k). Under Section 110, the employer treats $5,000 of QSLP as a deferral and contributes $4,000 (5% of $80,000) as a match into the 401(k). Without Section 110, the employee would receive $0 in match.

Plan Eligibility: 401(k), 403(b), 457(b), SIMPLE

Section 110 applies to:

• 401(k) plans (including safe harbor 401(k))
• 403(b) plans
• Governmental 457(b) plans
• SIMPLE IRAs

Adoption is optional. No plan is required to add a QSLP match feature.

Annual Employee Certification Requirements

Per Section 110 and IRS Notice 2024-63, the employer may rely on the employee's annual certification of the following:

1. The amount of the loan payment
2. That the payment was made by the employee
3. That the loan is a qualified education loan used to pay the employee's own qualified higher education expenses
4. That the loan was incurred by the employee

A single annual certification covering all QSLPs for the plan year is permitted. Employers do not need to independently verify the loan or payment, though they may set up reasonable internal procedures.

IRS Notice 2024-63 — What It Clarified

Issued in August 2024, IRS Notice 2024-63 provided long-awaited operational guidance. Key clarifications:

• Annual certification is sufficient. No need for payment-by-payment verification.
• QSLP matches are tested separately for ADP purposes if the plan elects (relief intended to ease nondiscrimination testing).
• Match timing: an employer may match QSLPs at the same frequency it matches regular deferrals, or on a different reasonable frequency (e.g., annually) as long as it is uniform.
• True-up contributions are permitted to align QSLP match timing with end-of-year reconciliation.
• Reasonable procedures: the employer may set a deadline (no earlier than three months after the end of the plan year) for QSLP certification.

Plan Amendment and ERISA Considerations

Adopting QSLP matching requires a formal plan amendment. SECURE 2.0 Section 501 generally allows discretionary amendments to be adopted by the end of the 2026 plan year (extended for governmental and collectively bargained plans), so employers adopting in 2026 still have time to memorialize the amendment.

Key ERISA and plan-design considerations:

• Uniformity: the match formula and eligibility for QSLPs must mirror those for elective deferrals.
• Vesting: QSLP matches follow the same vesting schedule as regular matching contributions.
• Recordkeeping: certifications must be retained per ERISA §107 (six years).
• Form 5500 reporting: QSLP matches are reported as employer contributions in the normal manner.

Section 110 vs. Section 127: A Side-by-Side

Many BenefitPlus clients offer both: direct loan repayment under §127 plus QSLP match under §110. See the Section 127 Complete Guide 2026 for the companion provision.

Who Benefits Most

The employees who benefit most from a Section 110 program are those who:

• Have student loan debt and are actively paying it down
• Cannot afford to also contribute to the 401(k) at the level needed to capture the full employer match
• Would otherwise leave employer matching dollars on the table indefinitely

Industry surveys consistently show that roughly one-third to one-half of employees with student debt decline to participate in their 401(k) primarily because of competing debt obligations. Section 110 directly addresses this group.

Implementation Checklist

1. Confirm plan type eligibility (401(k), 403(b), 457(b), or SIMPLE).
2. Coordinate with recordkeeper to confirm system support for QSLP tracking.
3. Draft plan amendment with QSLP match feature, certification process, and timing.
4. Design certification form capturing the four elements required by Notice 2024-63.
5. Communicate to employees: eligibility, how to certify, deadlines.
6. Train payroll and HR on the certification workflow.
7. Set the certification deadline (no earlier than 3 months after plan year end).
8. Plan for annual nondiscrimination testing with the QSLP separate-testing election if appropriate.

Frequently Asked Questions

Q1: Does the employee have to contribute to the 401(k) to get the QSLP match?

No. That is the entire point of Section 110. The employee's loan payment substitutes for an elective deferral.

Q2: Can the employer match QSLPs at a different rate than 401(k) deferrals?

No. Section 110 requires the QSLP match to use the same formula as the regular elective deferral match.

Q3: Are spouse or parent loan payments eligible?

No. Only the employee's own qualified education loans qualify.

Q4: What is the annual limit on QSLPs that can be matched?

The §402(g) elective deferral limit applies (e.g., $23,500 in 2025), reduced by any actual elective deferrals the employee made for the year.

Q5: Does the employer have to verify the loan payments?

No. The employer may rely on the employee's annual certification per IRS Notice 2024-63.

Q6: Can a safe harbor 401(k) include QSLP matching?

Yes. SECURE 2.0 explicitly contemplates this and Notice 2024-63 confirms operational compatibility.

Q7: When is the plan amendment due?

Discretionary SECURE 2.0 amendments are generally due by the end of the 2026 plan year for non-governmental, non-collectively-bargained plans.

Q8: Can an employee receive both a Section 127 SLRA payment and a Section 110 match in the same year?

Yes. The provisions are independent and stackable.

Q9: How are QSLP matches treated for ADP/ACP testing?

Notice 2024-63 allows employers to elect to test QSLP-driven matching contributions separately from the rest of the ACP test, easing potential testing failures.

Sources

• SECURE 2.0 Act of 2022, §110 — Pub. L. 117-328, Division T
• IRS Notice 2024-63 (August 2024)
• IRC §401(m), §402(g), §221(d)
• DOL/ERISA §107 recordkeeping requirements