Bradley partner David Joffe was quoted in a Bloomberg Law article regarding employer plan sponsors adopting new plan features that would allow employers to treat workers’ monthly student loan debt repayments as retirement savings contributions when calculating matching benefits.
In-plan emergency savings accounts and withdrawals related to domestic abuse claims also are add-ons employers can choose to begin adopting, but plan sponsor clients don’t seem interested in making it easier for participants to take money out of their accounts well ahead of retirement age, Joffe explained.
These provisions will take effect in 2024, but many plan sponsors are wary of adopting amendments that would allow for worker student loan repayments to be treated as 401(k) contributions or establish in-plan emergency savings accounts.
“I haven’t seen a great interest among employers to authorize these additional types of distributions,” he said. “In a sense, most employers think there already are ways to get money out. A loan is perceived as better. You’re not losing out on your retirement savings, because you’re repaying it yourself.”
The full article, “Employers Cautious on 401(k) Law Optional Provisions in New Year,” was published in Bloomberg Law on December 28, 2023. (login required)