Retirement Parity for Student Loans Act of 2021

I 117TH CONGRESS 1ST SESSION H. R. 2917 To amend the Internal Revenue Code of 1986 to provide for retirement matching contributions by employers on account of student loan pay- ments made by employees. IN THE HOUSE OF REPRESENTATIVES APRIL 30, 2021 Mr. DANNY K. DAVIS of Illinois (for himself, Mr. LAHOOD, Mr. PASCRELL, Mr. ESTES, Mr. LARSON of Connecticut, Ms. SEWELL, Mrs. TRAHAN, and Mr. ZELDIN) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to provide for retirement matching contributions by employers on account of student loan payments made by employees. 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 of 2021’’. 5 VerDate Sep 11 2014 02:33 Jun 09, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2917.IH H2917 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 2917 IH SEC. 2. TREATMENT OF STUDENT LOAN PAYMENTS AS 1 ELECTIVE DEFERRALS FOR PURPOSES OF 2 MATCHING CONTRIBUTIONS. 3 (a) IN GENERAL.—Section 401(m)(4)(A) of the In- 4 ternal Revenue Code of 1986 is amended by striking 5 ‘‘and’’ at the end of clause (i), by striking the period at 6 the end of clause (ii) and inserting ‘‘, and’’, and by adding 7 at the end the following new clause: 8 ‘‘(iii) subject to the requirements of 9 paragraph (13), any employer contribution 10 made to a defined contribution plan on be- 11 half of an employee on account of a quali- 12 fied student loan payment.’’. 13 (b) QUALIFIED STUDENT LOAN PAYMENT.—Section 14 401(m)(4) of such Code is amended by adding at the end 15 the following new subparagraph: 16 ‘‘(D) QUALIFIED STUDENT LOAN PAY- 17 MENT.—The term ‘qualified student loan pay- 18 ment’ means a payment made by an employee 19 in repayment of a qualified education loan (as 20 defined section 221(d)(1)) incurred by the em- 21 ployee to pay qualified higher education ex- 22 penses, but only— 23 ‘‘(i) to the extent such payments in 24 the aggregate for the year do not exceed 25 an amount equal to— 26 VerDate Sep 11 2014 02:33 Jun 09, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2917.IH H2917 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 2917 IH ‘‘(I) the limitation applicable 1 under section 402(g) for the year (or, 2 if lesser, the employee’s compensation 3 (as defined in section 415(c)(3)) for 4 the year), reduced by 5 ‘‘(II) the elective deferrals made 6 by the employee for such year, and 7 ‘‘(ii) if the employee certifies to the 8 employer making the matching contribu- 9 tion under this paragraph that such pay- 10 ment has been made on such loan. 11 For purposes of this subparagraph, the term 12 ‘qualified higher education expenses’ means the 13 cost of attendance (as defined in section 472 of 14 the Higher Education Act of 1965, as in effect 15 on the day before the date of the enactment of 16 the Taxpayer Relief Act of 1997) at an eligible 17 educational institution (as defined in section 18 221(d)(2)).’’. 19 (c) MATCHING CONTRIBUTIONS FOR QUALIFIED 20 STUDENT LOAN PAYMENTS.—Section 401(m) of such 21 Code is amended by redesignating paragraph (13) as para- 22 graph (14), and by inserting after paragraph (12) the fol- 23 lowing new paragraph: 24 VerDate Sep 11 2014 02:33 Jun 09, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2917.IH H2917 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 2917 IH ‘‘(13) MATCHING CONTRIBUTIONS FOR QUALI- 1 FIED STUDENT LOAN PAYMENTS.— 2 ‘‘(A) IN GENERAL.—For purposes of para- 3 graph (4)(A)(iii), an employer contribution 4 made to a defined contribution plan on account 5 of a qualified student loan payment shall be 6 treated as a matching contribution for purposes 7 of this title if— 8 ‘‘(i) the plan provides matching con- 9 tributions on account of elective deferrals 10 at the same rate as contributions on ac- 11 count of qualified student loan payments, 12 ‘‘(ii) the plan provides matching con- 13 tributions on account of qualified student 14 loan payments only on behalf of employees 15 otherwise eligible to receive matching con- 16 tributions on account of elective deferrals, 17 ‘‘(iii) under the plan, all employees el- 18 igible to receive matching contributions on 19 account of elective deferrals are eligible to 20 receive matching contributions on account 21 of qualified student loan payments, and 22 ‘‘(iv) the plan provides that matching 23 contributions on account of qualified stu- 24 dent loan payments vest in the same man- 25 VerDate Sep 11 2014 02:33 Jun 09, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2917.IH H2917 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 2917 IH ner as matching contributions on account 1 of elective deferrals. 2 ‘‘(B) TREATMENT FOR PURPOSES OF NON- 3 DISCRIMINATION RULES, ETC.— 4 ‘‘(i) NONDISCRIMINATION RULES.— 5 For purposes of subparagraph (A)(iii), 6 subsection (a)(4), and section 410(b), 7 matching contributions described in para- 8 graph (4)(A)(iii) shall not fail to be treated 9 as available to an employee solely because 10 such employee does not have debt incurred 11 under a qualified education loan (as de- 12 fined in section 221(d)(1)). 13 ‘‘(ii) STUDENT LOAN PAYMENTS NOT 14 TREATED AS PLAN CONTRIBUTION.—Ex- 15 cept as provided in clause (iii), a qualified 16 student loan payment shall not be treated 17 as a contribution to a plan under this title. 18 ‘‘(iii) MATCHING CONTRIBUTION 19 RULES.—Solely for purposes of meeting 20 the requirements of paragraph (11)(B) or 21 (12) of this subsection, or paragraph 22 (11)(B)(i)(II), (12)(B), or (13)(D) of sub- 23 section (k), a plan may treat a qualified 24 student loan payment as an elective defer- 25 VerDate Sep 11 2014 02:33 Jun 09, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2917.IH H2917 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 2917 IH ral or an elective contribution, whichever is 1 applicable. 2 ‘‘(iv) ACTUAL DEFERRAL PERCENT- 3 AGE TESTING.—In determining whether a 4 plan meets the requirements of subsection 5 (k)(3)(A)(ii) for a plan year, the plan may 6 apply the requirements of such subsection 7 separately with respect to all employees 8 who receive matching contributions de- 9 scribed in paragraph (4)(A)(iii) for the 10 plan year. 11 ‘‘(C) EMPLOYER MAY RELY ON EMPLOYEE 12 CERTIFICATION.—The employer may rely on an 13 employee certification of payment under para- 14 graph (4)(D)(ii).’’. 15 (d) SIMPLE RETIREMENT ACCOUNTS.—Section 16 408(p)(2) of such Code is amended by adding at the end 17 the following new subparagraph: 18 ‘‘(F) MATCHING CONTRIBUTIONS FOR 19 QUALIFIED STUDENT LOAN PAYMENTS.— 20 ‘‘(i) IN GENERAL.—Subject to the 21 rules of clause (iii), an arrangement shall 22 not fail to be treated as meeting the re- 23 quirements of subparagraph (A)(iii) solely 24 because under the arrangement, solely for 25 VerDate Sep 11 2014 02:33 Jun 09, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2917.IH H2917 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 2917 IH purposes of such subparagraph, qualified 1 student loan payments are treated as 2 amounts elected by the employee under 3 subparagraph (A)(i)(I) to the extent such 4 payments do not exceed— 5 ‘‘(I) the applicable dollar amount 6 under subparagraph (E) (after appli- 7 cation of section 414(v)) for the year 8 (or, if lesser, the employee’s com- 9 pensation (as defined in section 10 415(c)(3)) for the year), reduced by 11 ‘‘(II) any other amounts elected 12 by the employee under subparagraph 13 (A)(i)(I) for the year. 14 ‘‘(ii) QUALIFIED STUDENT LOAN PAY- 15 MENT.—For purposes of this subpara- 16 graph— 17 ‘‘(I) IN GENERAL.—The term 18 ‘qualified student loan payment’ 19 means a payment made by an em- 20 ployee in repayment of a qualified 21 education loan (as defined in section 22 221(d)(1)) incurred by the employee 23 to pay qualified higher education ex- 24 penses, but only if the employee cer- 25 VerDate Sep 11 2014 02:33 Jun 09, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H2917.IH H2917 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 2917 IH tifies to the employer making the 1 matching contribution that such pay- 2 ment has been made on such a loan. 3 ‘‘(II) QUALIFIED HIGHER EDU- 4 CATION EXPENSES.—The term ‘quali- 5 fied higher education expenses’ has 6 the same meaning as when used in 7 section 401(m)(4)(D). 8 ‘‘(iii) APPLICABLE RULES.—Clause (i) 9 shall apply to an arrangement only if, 10 under the arrangement— 11 ‘‘(I) matching contributions on 12 account of qualified student loan pay- 13 ments are provided only on behalf of 14 employees otherwise eligible to elect 15 contributions under subparagraph 16 (A)(i)(I), and 17 ‘‘(II) all employees otherwise eli- 18 gible to participate in the arrange- 19 ment are eligible to receive matching 20 contributions on account of qualified 21 student loan payments.’’. 22 (e) 403(b) PLANS.—Section 403(b)(12)(A) of such 23 Code is amended by adding at the end the following: ‘‘The 24 fact that the employer offers matching contributions on 25 VerDate Sep 11 2014 02:33 Jun 09, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H2917.IH H2917 kjohnson on DSK79L0C42PROD with BILLS 9 •HR 2917 IH account of qualified student loan payments as described 1 in section 401(m)(13) shall not be taken into account in 2 determining whether the arrangement satisfies the re- 3 quirements of clause (ii) (and any regulation there- 4 under).’’. 5 (f) 457(b) PLANS.—Section 457(b) of such Code is 6 amended by adding at the end the following: ‘‘A plan 7 which is established and maintained by an employer which 8 is described in subsection (e)(1)(A) shall not be treated 9 as failing to meet the requirements of this subsection sole- 10 ly because the plan, or another plan maintained by the 11 employer which meets the requirements of section 401(a) 12 or 403(b), provides for matching contributions on account 13 of qualified student loan payments as described in section 14 401(m)(13).’’. 15 (g) REGULATORY AUTHORITY.—The Secretary shall 16 prescribe regulations for purposes of implementing the 17 amendments made by this section, including regulations— 18 (1) permitting a plan to make matching con- 19 tributions for qualified student loan payments, as 20 defined in sections 401(m)(4)(D) and 408(p)(2)(F) 21 of the Internal Revenue Code of 1986, as added by 22 this section, at a different frequency than matching 23 contributions are otherwise made under the plan, 24 VerDate Sep 11 2014 02:33 Jun 09, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H2917.IH H2917 kjohnson on DSK79L0C42PROD with BILLS 10 •HR 2917 IH provided that the frequency is not less than annu- 1 ally; 2 (2) permitting employers to establish reasonable 3 procedures to claim matching contributions for such 4 qualified student loan payments under the plan, in- 5 cluding an annual deadline (not earlier than 3 6 months after the close of each plan year) by which 7 a claim must be made; and 8 (3) promulgating model amendments which 9 plans may adopt to implement matching contribu- 10 tions on such qualified student loan payments for 11 purposes of sections 401(m), 408(p), 403(b), and 12 457(b) of the Internal Revenue Code of 1986. 13 (h) EFFECTIVE DATE.—The amendments made by 14 this section shall apply to contributions made for years 15 beginning after December 31, 2021. 16 Æ VerDate Sep 11 2014 02:33 Jun 09, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6301 E:\BILLS\H2917.IH H2917 kjohnson on DSK79L0C42PROD with BILLS