Paying down student debt could soon boost your 401(k) balance. Here's how
Publishing timestamp: 2024-01-11 11:48:49
Summary
The article discusses a new provision in the Secure 2.0 Act of 2022 that allows employers to match workers' student loan payments with contributions to their retirement plans. This provision aims to help employees who are struggling to save for retirement due to student debt. The article highlights the high levels of student loan debt in the U.S. and the impact it has on retirement savings. It also mentions a survey showing that nearly half of student loan borrowers said their debt affected their ability to save for retirement. The article explains how Abbott, a medical device and healthcare company, developed a 401(k) matching program for student borrowers and received a private ruling from the IRS to launch the benefit. The new provision in the Secure 2.0 Act now allows other employers to implement similar programs without special dispensation. The article advises interested workers to inquire with their company's human resources department about the benefit and shares Abbott's "Freedom 2 Save" blueprint as a guide. It also notes that employers may choose to match either student loan payments or retirement contributions, but not both. Additionally, it mentions the tax implications of pausing 401(k) contributions to focus on paying down student debt.
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Keywords: education, personal loans, abbott laboratories, business news, labor economy, personal finance, personnel, breaking news: politics, social issues, politics,
Source: https://www.cnbc.com/2024/01/11/how-paying-student-debt-could-boost-your-401k-balance.html