Retirement Parity for Student Loans Act

II 117TH CONGRESS 1ST SESSION S. 1443 To amend the Internal Revenue Code of 1986 to permit treatment of student loan payments as elective deferrals for purposes of employer matching contributions, and for other purposes. IN THE SENATE OF THE UNITED STATES APRIL 29, 2021 Mr. WYDEN (for himself, Mr. BROWN, Ms. CANTWELL, Mr. CARDIN, and Mr. WHITEHOUSE) introduced the following bill; which was read twice and re- ferred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to permit treatment of student loan payments as elective deferrals for purposes of employer matching contributions, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Retirement Parity for 4 Student Loans Act’’. 5 VerDate Sep 11 2014 03:47 May 22, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1443.IS S1443 kjohnson on DSK79L0C42PROD with BILLS 2 •S 1443 IS SEC. 2. TREATMENT OF STUDENT LOAN PAYMENTS AS 1 ELECTIVE DEFERRALS FOR PURPOSES OF 2 MATCHING CONTRIBUTIONS. 3 (a) IN GENERAL.—Subparagraph (A) of section 4 401(m)(4) of the Internal Revenue Code of 1986 is 5 amended by striking ‘‘and’’ at the end of clause (i), by 6 striking the period at the end of clause (ii) and inserting 7 ‘‘, and’’, and by adding at the end the following new 8 clause: 9 ‘‘(iii) subject to the requirements of 10 paragraph (13), any employer contribution 11 made to a defined contribution plan on be- 12 half of an employee on account of a quali- 13 fied student loan payment.’’. 14 (b) QUALIFIED STUDENT LOAN PAYMENT.—Para- 15 graph (4) of section 401(m) of the Internal Revenue Code 16 of 1986 is amended by adding at the end the following 17 new subparagraph: 18 ‘‘(D) QUALIFIED STUDENT LOAN PAY- 19 MENT.—The term ‘qualified student loan pay- 20 ment’ means a payment made by an employee 21 in repayment of a qualified education loan (as 22 defined in section 221(d)(1)) incurred by the 23 employee to pay qualified higher education ex- 24 penses, but only— 25 VerDate Sep 11 2014 03:47 May 22, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1443.IS S1443 kjohnson on DSK79L0C42PROD with BILLS 3 •S 1443 IS ‘‘(i) to the extent such payments in 1 the aggregate for the year do not exceed 2 an amount equal to— 3 ‘‘(I) the limitation applicable 4 under section 402(g) for the year (or, 5 if lesser, the employee’s compensation 6 (as defined in section 415(c)(3)) for 7 the year), reduced by 8 ‘‘(II) the elective deferrals made 9 by the employee for such year, and 10 ‘‘(ii) if the employee certifies to the 11 employer making the matching contribu- 12 tion under this paragraph that such pay- 13 ment has been made on such loan. 14 For purposes of this subparagraph, the term 15 ‘qualified higher education expenses’ means the 16 cost of attendance (as defined in section 472 of 17 the Higher Education Act of 1965, as in effect 18 on the day before the date of the enactment of 19 the Taxpayer Relief Act of 1997) at an eligible 20 educational institution (as defined in section 21 221(d)(2)).’’. 22 (c) MATCHING CONTRIBUTIONS FOR QUALIFIED 23 STUDENT LOAN PAYMENTS.—Subsection (m) of section 24 401 of the Internal Revenue Code of 1986 is amended by 25 VerDate Sep 11 2014 03:47 May 22, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1443.IS S1443 kjohnson on DSK79L0C42PROD with BILLS 4 •S 1443 IS redesignating paragraph (13) as paragraph (14), and by 1 inserting after paragraph (12) the following new para- 2 graph: 3 ‘‘(13) MATCHING CONTRIBUTIONS FOR QUALI- 4 FIED STUDENT LOAN PAYMENTS.— 5 ‘‘(A) IN GENERAL.—For purposes of para- 6 graph (4)(A)(iii), an employer contribution 7 made to a defined contribution plan on account 8 of a qualified student loan payment shall be 9 treated as a matching contribution for purposes 10 of this title if— 11 ‘‘(i) the plan provides matching con- 12 tributions on account of elective deferrals 13 at the same rate as contributions on ac- 14 count of qualified student loan payments, 15 ‘‘(ii) the plan provides matching con- 16 tributions on account of qualified student 17 loan payments only on behalf of employees 18 otherwise eligible to receive matching con- 19 tributions on account of elective deferrals, 20 ‘‘(iii) under the plan, all employees el- 21 igible to receive matching contributions on 22 account of elective deferrals are eligible to 23 receive matching contributions on account 24 of qualified student loan payments, and 25 VerDate Sep 11 2014 03:47 May 22, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1443.IS S1443 kjohnson on DSK79L0C42PROD with BILLS 5 •S 1443 IS ‘‘(iv) the plan provides that matching 1 contributions on account of qualified stu- 2 dent loan payments vest in the same man- 3 ner as matching contributions on account 4 of elective deferrals. 5 ‘‘(B) TREATMENT FOR PURPOSES OF NON- 6 DISCRIMINATION RULES, ETC.— 7 ‘‘(i) NONDISCRIMINATION RULES.— 8 For purposes of subparagraph (A)(iii), 9 subsection (a)(4), and section 410(b), 10 matching contributions described in para- 11 graph (4)(A)(iii) shall not fail to be treated 12 as available to an employee solely because 13 such employee does not have debt incurred 14 under a qualified education loan (as de- 15 fined in section 221(d)(1)). 16 ‘‘(ii) STUDENT LOAN PAYMENTS NOT 17 TREATED AS PLAN CONTRIBUTION.—Ex- 18 cept as provided in clause (iii), a qualified 19 student loan payment shall not be treated 20 as a contribution to a plan under this title. 21 ‘‘(iii) MATCHING CONTRIBUTION 22 RULES.—Solely for purposes of meeting 23 the requirements of paragraph (11)(B) or 24 (12) of this subsection, or paragraph 25 VerDate Sep 11 2014 03:47 May 22, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1443.IS S1443 kjohnson on DSK79L0C42PROD with BILLS 6 •S 1443 IS (11)(B)(i)(II), (12)(B), or (13)(D) of sub- 1 section (k), a plan may treat a qualified 2 student loan payment as an elective defer- 3 ral or an elective contribution, whichever is 4 applicable. 5 ‘‘(iv) ACTUAL DEFERRAL PERCENT- 6 AGE TESTING.—In determining whether a 7 plan meets the requirements of subsection 8 (k)(3)(A)(ii) for a plan year, the plan may 9 apply the requirements of such subsection 10 separately with respect to all employees 11 who receive matching contributions de- 12 scribed in paragraph (4)(A)(iii) for the 13 plan year. 14 ‘‘(C) EMPLOYER MAY RELY ON EMPLOYEE 15 CERTIFICATION.—The employer may rely on an 16 employee certification of payment under para- 17 graph (4)(D)(ii).’’. 18 (d) SIMPLE RETIREMENT ACCOUNTS.—Paragraph 19 (2) of section 408(p) of the Internal Revenue Code of 20 1986 is amended by adding at the end the following new 21 subparagraph: 22 ‘‘(F) MATCHING CONTRIBUTIONS FOR 23 QUALIFIED STUDENT LOAN PAYMENTS.— 24 VerDate Sep 11 2014 03:47 May 22, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1443.IS S1443 kjohnson on DSK79L0C42PROD with BILLS 7 •S 1443 IS ‘‘(i) IN GENERAL.—Subject to the 1 rules of clause (iii), an arrangement shall 2 not fail to be treated as meeting the re- 3 quirements of subparagraph (A)(iii) solely 4 because under the arrangement, solely for 5 purposes of such subparagraph, qualified 6 student loan payments are treated as 7 amounts elected by the employee under 8 subparagraph (A)(i)(I) to the extent such 9 payments do not exceed— 10 ‘‘(I) the applicable dollar amount 11 under subparagraph (E) (after appli- 12 cation of section 414(v)) for the year 13 (or, if lesser, the employee’s com- 14 pensation (as defined in section 15 415(c)(3)) for the year), reduced by 16 ‘‘(II) any other amounts elected 17 by the employee under subparagraph 18 (A)(i)(I) for the year. 19 ‘‘(ii) QUALIFIED STUDENT LOAN PAY- 20 MENT.—For purposes of this subpara- 21 graph— 22 ‘‘(I) IN GENERAL.—The term 23 ‘qualified student loan payment’ 24 means a payment made by an em- 25 VerDate Sep 11 2014 03:47 May 22, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1443.IS S1443 kjohnson on DSK79L0C42PROD with BILLS 8 •S 1443 IS ployee in repayment of a qualified 1 education loan (as defined in section 2 221(d)(1)) incurred to pay qualified 3 higher education expenses, but only if 4 the employee certifies to the employer 5 making the matching contribution 6 that such payment has been made on 7 such a loan. 8 ‘‘(II) QUALIFIED HIGHER EDU- 9 CATION EXPENSES.—The term ‘quali- 10 fied higher education expenses’ has 11 the same meaning as when used in 12 section 401(m)(4)(D). 13 ‘‘(iii) APPLICABLE RULES.—Clause (i) 14 shall apply to an arrangement only if, 15 under the arrangement— 16 ‘‘(I) matching contributions on 17 account of qualified student loan pay- 18 ments are provided only on behalf of 19 employees otherwise eligible to elect 20 contributions under subparagraph 21 (A)(i)(I), and 22 ‘‘(II) all employees otherwise eli- 23 gible to participate in the arrange- 24 ment are eligible to receive matching 25 VerDate Sep 11 2014 03:47 May 22, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1443.IS S1443 kjohnson on DSK79L0C42PROD with BILLS 9 •S 1443 IS contributions on account of qualified 1 student loan payments.’’. 2 (e) 403(b) PLANS.—Subparagraph (A) of section 3 403(b)(12) of the Internal Revenue Code of 1986 is 4 amended by adding at the end the following: ‘‘The fact 5 that the employer offers matching contributions on ac- 6 count of qualified student loan payments as described in 7 section 401(m)(13) shall not be taken into account in de- 8 termining whether the arrangement satisfies the require- 9 ments of clause (ii) (and any regulation thereunder).’’. 10 (f) 457(b) PLANS.—Subsection (b) of section 457 of 11 the Internal Revenue Code of 1986 is amended by adding 12 at the end the following: ‘‘A plan which is established and 13 maintained by an employer which is described in sub- 14 section (e)(1)(A) shall not be treated as failing to meet 15 the requirements of this subsection solely because the 16 plan, or another plan maintained by the employer which 17 meets the requirements of section 401(a), provides for 18 matching contributions on account of qualified student 19 loan payments as described in section 401(m)(13).’’. 20 (g) REGULATORY AUTHORITY.—The Secretary of the 21 Treasury (or such Secretary’s delegate) shall prescribe 22 regulations for purposes of implementing the amendments 23 made by this section, including regulations— 24 VerDate Sep 11 2014 03:47 May 22, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1443.IS S1443 kjohnson on DSK79L0C42PROD with BILLS 10 •S 1443 IS (1) permitting a plan to make matching con- 1 tributions for qualified student loan payments, as 2 defined in sections 401(m)(4)(D) and 408(p)(2)(F) 3 of the Internal Revenue Code of 1986, as added by 4 this section, at a different frequency than matching 5 contributions are otherwise made under the plan, 6 provided that the frequency is not less than annu- 7 ally; 8 (2) permitting employers to establish reasonable 9 procedures to claim matching contributions for such 10 qualified student loan payments under the plan, in- 11 cluding an annual deadline (not earlier than 3 12 months after the close of each plan year) by which 13 a claim must be made; and 14 (3) promulgating model amendments which 15 plans may adopt to implement matching contribu- 16 tions on such qualified student loan payments for 17 purposes of sections 401(m), 408(p), 403(b), and 18 457(b) of the Internal Revenue Code of 1986. 19 (h) EFFECTIVE DATE.—The amendments made by 20 this section shall apply to contributions made for years 21 beginning after December 31, 2021. 22 Æ VerDate Sep 11 2014 03:47 May 22, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6301 E:\BILLS\S1443.IS S1443 kjohnson on DSK79L0C42PROD with BILLS