What is a Qualified Student Loan Payment (QSLP)?
A Qualified Student Loan Payment (QSLP) is a payment made toward a student loan that was used to cover eligible higher education expenses. These expenses include tuition, fees, books, and necessary equipment at an accredited institution where the employee was enrolled at least part-time. Payments can include both the required minimum and any additional amounts, as long as they do not exceed the annual deferral limit.
Is the 401(k) match on student loans available to all Betterment plans?
No, this feature is exclusively available for Pro and Flagship level plans. If you’re a plan sponsor interested in offering this benefit, contact Support and we can help you activate this feature.
How does the 401(k) match on student loan payments work?
This benefit allows employees to receive a 401(k) match based on qualified student loan payments (QSLPs). Instead of contributing to their 401(k) directly, employees making eligible student loan payments can receive a company match in their traditional 401(k) account.
Is the match formula different from the standard 401(k) match?
No, the employer match on student loan payments follows the same formula as the match for 401(k) contributions. The total match an employee can receive, including contributions from both direct 401(k) deferrals and student loan payments, cannot exceed the maximum match outlined in your plan’s terms.
Can employees contribute to their 401(k) and still receive the match on student loan payments?
Yes, employees can contribute to their 401(k) while also making student loan payments. However, they won’t receive an additional match—only up to the total company match limit based on your plan’s formula.
When is the match deposited into the employee’s 401(k)?
Although the source of the match is different, it follows the same structure as a traditional 401(k) match. The 401(k) match on student loan payments is typically deposited in the first quarter of the following year.
How does an employee indicate they want to participate?
Employees indicate their participation by entering a projected student loan payment amount in their Betterment account once their employer enables the feature.
At the end of the year, employees will be required to certify their actual payments to confirm eligibility. Until then, their projected amount is for planning purposes only and will not be shared with their employer.
How do employees submit their projected student loan payments?
Employees log into their personal Betterment account, navigate to "Employer Benefits," and select "Set up match" under the 401(k) match on student loan payments section.
How does the end-of-year (EOY) certification process work?
Since annual certification is required, employees who entered a projected student loan payment amount will be prompted to self-certify through the B4B platform starting in December.
For example, an employee who participated in the benefit will receive an email from Betterment later in the year, prompting them to log in and complete the EOY self-certification flow.
Once in the certification flow, the employee will:
- Enter the actual amounts paid – They must input the amounts they actually paid toward qualified student loans during the period they were eligible for the benefit.
- Self-Certify those amounts – They will confirm that their payments meet the requirements outlined in the legislation.
After completing certification:
The employee will receive a confirmation message and email. The self-certified student loan payment amount will be visible to the employer during Compliance testing which is sufficient under existing regulations, however Plan Sponsors and/or 401(k) Plan Committees are able to set their own level of rigor and documentation they would like to maintain for these records. .
Can employees receive a match on student loan payments made for a spouse or child?
Current legislation does not explicitly cover this scenario. However, based on our understanding, if the loan payments meet the definition of a QSLP (i.e., for the employee’s own educational expenses), they should qualify for the match.
Does this benefit apply to both federal and private student loans?
Yes, QSLPs include both public and private student loans, as long as they were incurred to cover the employee’s own qualified higher education expenses.
Are employees required to provide proof of student loan payments?
It is up to the plan sponsor to determine the proof of payment requirements. However, the policy should be applied consistently for all participants in the program.
How can I enable this feature for my plan?
Plan sponsors can enable this feature by contacting their dedicated Betterment account representative.
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