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S. 3771 (115th): Retirement Parity for Student Loans Act


The text of the bill below is as of Dec 18, 2018 (Introduced). The bill was not enacted into law.


II

115th CONGRESS

2d Session

S. 3771

IN THE SENATE OF THE UNITED STATES

December 18, 2018

(for himself and Mr. Cardin) introduced the following bill; which was read twice and referred 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.

1.

Short title

This Act may be cited as the Retirement Parity for Student Loans Act.

2.

Treatment of student loan payments as elective deferrals for purposes of matching contributions

(a)

In general

Subparagraph (A) of section 401(m)(4) of the Internal Revenue Code of 1986 is amended by striking and at the end of clause (i), by striking the period at the end of clause (ii) and inserting , and, and by adding at the end the following new clause:

(iii)

subject to the requirements of paragraph (13), any employer contribution made to a defined contribution plan on behalf of an employee on account of a qualified student loan payment.

.

(b)

Qualified student loan payment

Paragraph (4) of section 401(m) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:

(D)

Qualified student loan payment

The term qualified student loan payment means a payment made by an employee in repayment of a qualified education loan (as defined in section 221(d)(1)) incurred to pay qualified higher education expenses of the employee, but only—

(i)

to the extent such payments in the aggregate for the year do not exceed an amount equal to—

(I)

the limitation applicable under section 402(g) for the year (or, if lesser, the employee's compensation (as defined in section 415(c)(3)) for the year), reduced by

(II)

the elective deferrals made by the employee for such year, and

(ii)

if the employee provides evidence of such loan and such payments to the employer making the matching contribution under this paragraph.

For purposes of this subparagraph, the term qualified higher education expenses means the cost of attendance (as defined in section 472 of the Higher Education Act of 1965, as in effect on the day before the date of the enactment of the Taxpayer Relief Act of 1997) at an eligible educational institution (as defined in section 221(d)(2)).

.

(c)

Matching contributions for qualified student loan payments

Subsection (m) of section 401 of the Internal Revenue Code of 1986 is amended by redesignating paragraph (13) as paragraph (14), and by inserting after paragraph (12) the following new paragraph:

(13)

Matching contributions for qualified student loan payments

(A)

In general

For purposes of paragraph (4)(A)(iii), an employer contribution made to a defined contribution plan on account of a qualified student loan payment shall be treated as a matching contribution for purposes of this title if—

(i)

the plan provides matching contributions on account of elective deferrals at the same rate as contributions on account of qualified student loan payments,

(ii)

the plan provides matching contributions on account of qualified student loan payments only on behalf of employees otherwise eligible to make elective deferrals, and

(iii)

under the plan, all employees eligible to receive matching contributions on account of elective deferrals are eligible to receive matching contributions on account of qualified student loan payments.

(B)

Treatment for purposes of nondiscrimination rules, etc

(i)

Nondiscrimination rules

For purposes of subparagraph (A)(iii), subsection (a)(4), and section 410(b), matching contributions described in paragraph (4)(A)(iii) shall not fail to be treated as available to an employee solely because such employee does not have debt incurred under a qualified education loan (as defined in section 221(d)(1)).

(ii)

Student loan payments not treated as plan contribution

Except as provided in clause (iii), a qualified student loan payment shall not be treated as a contribution to a plan under this title.

(iii)

Matching contribution rules

Solely for purposes of meeting the requirements of paragraph (11)(B) or (12) of this subsection, or paragraph (11)(B)(i)(II), (12)(B), or (13)(D) of subsection (k), a plan may treat a qualified student loan payment as an elective deferral or an elective contribution, whichever is applicable.

(C)

Regulatory authority

The Secretary shall prescribe regulations—

(i)

setting forth the conditions under which a plan administrator may rely upon evidence submitted by an employee of qualified student loan payments, and

(ii)

permitting a plan to make matching contributions for qualified student loan repayments at a different frequency than matching contributions are otherwise made under the plan, provided that the frequency is not less than annually.

.

(d)

Simple retirement accounts

Paragraph (2) of section 408(p) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:

(F)

Matching contributions for qualified student loan payments

(i)

In general

Subject to the rules of clause (iii), an arrangement shall not fail to be treated as meeting the requirements of subparagraph (A)(iii) solely because under the arrangement, solely for purposes of such subparagraph, qualified student loan payments are treated as amounts elected by the employee under subparagraph (A)(i)(I) to the extent such payments do not exceed—

(I)

the applicable dollar amount under subparagraph (E) (after application of section 414(v)) for the year (or, if lesser, the employee's compensation (as defined in section 415(c)(3)) for the year), reduced by

(II)

any other amounts elected by the employee under subparagraph (A)(i)(I) for the year.

(ii)

Qualified student loan payment

For purposes of this subparagraph—

(I)

In general

The term qualified student loan payment means a payment made by an employee in repayment of a qualified education loan (as defined in section 221(d)(1)) incurred to pay qualified higher education expenses of the employee, but only if the employee provides evidence of such loan and such payments to the employer making the matching contribution.

(II)

Qualified higher education expenses

The term qualified higher education expenses has the same meaning as when used in section 401(m)(4)(D).

(iii)

Applicable rules

Clause (i) shall apply to an arrangement only if, under the arrangement—

(I)

matching contributions on account of qualified student loan payments are provided only on behalf of employees otherwise eligible to elect contributions under subparagraph (A)(i)(I), and

(II)

all employees otherwise eligible to participate in the arrangement are eligible to receive matching contributions on account of qualified student loan payments.

.

(e)

403(b) plans

Subparagraph (A) of section 403(b)(12) of the Internal Revenue Code of 1986 is amended by adding at the end the following: The fact that the employer offers matching contributions on account of qualified student loan payments as described in section 401(m)(13) shall not be taken into account in determining whether the arrangement satisfies the requirements of clause (ii) (and any regulation thereunder)..

(f)

Effective date

The amendments made by this section shall apply to contributions made for years beginning after December 31, 2019.