Six Senate Democrats introduced a bill Monday that would allow employers to make matching contributions to an employee's retirement plan while that employee makes student loan payments.
The Retirement Parity for Student Loans Act, introduced by Sens. Ron Wyden, D-Ore.; Maria Cantwell, D-Wash.; Ben Cardin, D-Md.; Sheldon Whitehouse, D-R.I.; Maggie Hassan, D-N.H.; and Sherrod Brown, D-Ohio, would permit 401(k), 403(b), SIMPLE and governmental 457(b) retirement plans to make matching contributions to workers as if their student loan payments were salary reduction contributions.
Under current law, employers may make matching contributions to those retirement plans only if employees are also making contributions.
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 was 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 a bill summary.
The rate of matching for student loans and for salary reduction contributions must be the same, the summary noted.
"The sooner workers start to save for retirement the better, and paying down student loans shouldn't stop them from building their nest egg," said Mr. Wyden, ranking member on the Senate Finance Committee, in a news release. "While a comprehensive response to the student loan debt crisis is needed, this policy change is an important piece of the puzzle."
The bill, which was introduced on its own, is also part of the larger retirement security package, the Retirement Security and Savings Act of 2019, introduced Tuesday by Sens. Rob Portman, R-Ohio, and Maryland's Mr. Cardin.