Retirement Parity for Student Loans Act of 2021
Bill: H.R.2917 | Sponsor: Rep. Davis, Danny K. (D-IL)
Policy area: Taxation

Summary:
Retirement Parity for Student Loans Act of 2021
This bill allows certain employer-sponsored retirement plans to make matching contributions for an employee's student loan payments as if the loan payments were salary reduction contributions to the retirement plan.

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 Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Retirement Parity for Student Loans 
Act of 2021''.

SEC. 2. TREATMENT OF STUDENT LOAN PAYMENTS AS ELECTIVE DEFERRALS FOR 
              PURPOSES OF MATCHING CONTRIBUTIONS.

    (a) In General.--Section 401(m)(4)(A) 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.--Section 401(m)(4) of such Code 
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 section 221(d)(1)) incurred by the 
                employee to pay qualified higher education expenses, 
                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 certifies to the 
                        employer making the matching contribution under 
                        this paragraph that such payment has been made 
                        on such loan.
                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.--
Section 401(m) of such Code 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 receive matching 
                        contributions on account of elective deferrals,
                            ``(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, and
                            ``(iv) the plan provides that matching 
                        contributions on account of qualified student 
                        loan payments vest in the same manner as 
                        matching contributions on account of elective 
                        deferrals.
                    ``(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.
                            ``(iv) Actual deferral percentage 
                        testing.--In determining whether a plan meets 
                        the requirements of subsection (k)(3)(A)(ii) 
                        for a plan year, the plan may apply the 
                        requirements of such subsection separately with 
                        respect to all employees who receive matching 
                        contributions described in paragraph 
                        (4)(A)(iii) for the plan year.
                    ``(C) Employer may rely on employee 
                certification.--The employer may rely on an employee 
                certification of payment under paragraph (4)(D)(ii).''.
    (d) Simple Retirement Accounts.--Section 408(p)(2) of such Code 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 by the employee to pay 
                                qualified higher education expenses, 
                                but only if the employee certifies to 
                                the employer making the matching 
                                contribution that such payment has been 
                                made on such a loan.
                                    ``(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.--Section 403(b)(12)(A) of such Code 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) 457(b) Plans.--Section 457(b) of such Code is amended by adding 
at the end the following: ``A plan which is established and maintained 
by an employer which is described in subsection (e)(1)(A) shall not be 
treated as failing to meet the requirements of this subsection solely 
because the plan, or another plan maintained by the employer which 
meets the requirements of section 401(a) or 403(b), provides for 
matching contributions on account of qualified student loan payments as 
described in section 401(m)(13).''.
    (g) Regulatory Authority.--The Secretary shall prescribe 
regulations for purposes of implementing the amendments made by this 
section, including regulations--
            (1) permitting a plan to make matching contributions for 
        qualified student loan payments, as defined in sections 
        401(m)(4)(D) and 408(p)(2)(F) of the Internal Revenue Code of 
        1986, as added by this section, at a different frequency than 
        matching contributions are otherwise made under the plan, 
        provided that the frequency is not less than annually;
            (2) permitting employers to establish reasonable procedures 
        to claim matching contributions for such qualified student loan 
        payments under the plan, including an annual deadline (not 
        earlier than 3 months after the close of each plan year) by 
        which a claim must be made; and
            (3) promulgating model amendments which plans may adopt to 
        implement matching contributions on such qualified student loan 
        payments for purposes of sections 401(m), 408(p), 403(b), and 
        457(b) of the Internal Revenue Code of 1986.
    (h) Effective Date.--The amendments made by this section shall 
apply to contributions made for years beginning after December 31, 
2021.
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