Balancing near and long-term priorities shows up every day in money management. However, opportunities for doing more of what matters to you are all around.
Say you’re working a full-time job, paying off student debt, and still wanting to plan for the future wisely. For many student loan borrowers, the Securing a Strong Retirement (SECURE) 2.0 Act is the answer to balancing paying off debt and investing for retirement. The SECURE 2.0 Act allows your employer to match the amount you pay toward student loans with the amount they contribute to your 401(k).
Sound too good to be true?
Here’s how you can use SECURE 2.0 to help you with your student loans.
- Make sure you have an eligible retirement account (e.g., 401[k], 403[b], 457[b], or Simple plan), and you also are making payments on a “qualifying education loan.” This could be a student loan for you, your spouse, or a dependent.
- “Certify” that you are actively paying off your federal or private student loans. Employers will specify what documentation they prefer, but it could be as simple as a recent statement from your lender.
- If your employer hasn’t heard of the program, you can give them this blog, or send them this article, from the Wall Street Journal, to get them started. Remember, your contributions cannot exceed annual retirement contribution limits set by the IRS. In case you forgot, they’re listed below!
| 401(k) contribution limits 2024 | 2024 LIMIT |
| Maximum employee contribution | $23,000 |
| Catch-up contribution (for those 50 and older) | $7,500 |
IRS, “401(k) limit increases to $23,000 for 2024, IRA limit rises to $7,000”, February 2024
Trade-offs are the usual go-to when it comes to money management. Still, by following these steps you might find you can balance your priorities for today and the future, without major sacrifices.
Something to think about:
Have I been sacrificing retirement savings to pay off student loans?
Something to do:
- Print out this blog and the Wall Street Journal article.
- Send it to your Human Resources department.
Photo by JC Dela Cuesta