Of all the features employers can now add to their workplace retirement plans as part of the SECURE 2.0 Act, one stands out for Kraft Heinz Co.: the provision allowing it to make employer matching contributions to the 401(k) accounts of workers paying back student loans.
"It is at the top of the list," said Michael Jabs, Kraft Heinz's Chicago-based associate director of pensions, about the provision that his company is considering adding to its $3.5 billion 401(k) plan.
"We continue to attract young talent, and I think we want to really focus on attracting and retaining good young people at Kraft Heinz."
Mr. Jabs explained that student debt is an issue for many employees and that it often prevents them from contributing to their 401(k) retirement accounts.
"While we would love to continue to encourage our participants to save for retirement, we recognize there might be some more pressing needs," he said.
The provision allows employers to make matching contributions for student loan repayments, meaning employees not contributing to their accounts can now get a match if they're paying back their student debt.
While employers could have implemented the feature prior to SECURE 2.0 — and some actually did — it was difficult and expensive to do so because of technical issues, particularly around non-discrimination testing, which the current legislation resolves.
"It's a general acknowledgment that the financial landscape for our employees is quite a bit more complicated I would say than it used to be," Mr. Jabs said of the provision that employers can begin implementing as soon as next year.
Many other employers are thinking along the same lines, according to industry observers.
Like Kraft Heinz, employers are considering implementing the provision because they want to maintain or gain a recruiting and retention edge, particularly if they have a young workforce. Many employers see it as the right thing to do because some employees — both those just out of school and those in the workforce for years — are so buried in college loan debt that they can't contribute to their retirement accounts and are missing out on the match.
Ms. Verdeyen explained that the interest is tied to employees' overall financial wellness and a "realization that one of the reasons that employees don't contribute to their 401(k) plans is the fact that they can have outside debt."
Still, the provision presents cost and administrative challenges that employers must weigh. Plan sponsors need to lean into their record keepers and other service providers to make system and process adjustments, said Curt Young, a partner of retirement solutions at Aon PLC in Charlotte, N.C.
"There are administrative things to really think about," Mr. Young said, referring to the high level of coordination with record keepers and payroll providers.