A Recent IRS Ruling Could Affect Your Retirement — What You Should Know, According to George Kamel
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Cynthia Measom
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Jenna Klaverweiden
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In a recent YouTube video, George Kamel, financial expert with Ramsey Solutions, explained that the IRS now allows companies to offer 401(k) matching based on employees’ student loan payments.
In many cases, employers who offer a 401(k) match make contributions to employees’ retirement accounts only if the employees are also contributing. However, with this rule, companies can offer 401(k) matches based on the amount employees pay toward student loans each month, rather than 401(k) contributions.
Here’s what this IRS rule could mean for your retirement.
Also see how much money Americans have in their 401(k) plans at every age.
What the IRS Ruling Entails
Kamel gave this example to show how this rule could work.
Say an employee makes $60,000 annually and the employer offers a 4% match. Kamel said that if the employee puts in at least $200 per month, the employer will match that and put in $200 per month, which is “free” money that offers a 100% return.
With the new option from the IRS, as detailed on the IRS website, employers also have the option of matching employees’ student loan payments — not just retirement contributions. In that case, if the employee made a $200 student loan payment, the employer could contribute $200 to the 401(k).
Kamel explained that although this ruling was part of the Secure 2.0 Act, which was signed into law in 2022, the IRS has only recently started approving companies to implement this program.
And some popular companies, like Disney, Chipotle and Walgreens, have jumped on the bandwagon. Walgreens, for example, will match up to 4%, per a press release. This option became available for Walgreens employees in January 2025.
Pros of the IRS Ruling
Here are some of the pros Kamel mentioned to this ruling.
First, free money is just that — money that’s free. “I love when people pay off their debt, so getting free money for paying off debt is definitely a combination I can get behind,” Kamel said.
Additionally, Kamel said that a student loan 401(k) match allows you to put extra paycheck funds toward debt while still investing for retirement, which he admitted is a big deal.
According to Experian, this offers the “best of both worlds.”
Cons of the IRS Ruling
That being said, there are some cons to consider.
“This applies to almost no one right now, and I don’t know that employers are going to be jumping on this bandwagon in droves anytime soon,” Kamel said. As reported by CNBC, about 100 companies are currently taking advantage of this ruling. While this may not sound like much, it covers 1.5 million employees — and the number of employers offering it has grown, per CNBC.
Additionally, Kamel pointed out that this can incentivize people to do the bare minimum.
“I talk a lot about how only investing up to your employer match is a great way to have a terrible retirement,” he said. “You see, traditionally, when you only invest up to the match, your retirement account grows by the amount you contribute and whatever your employer puts in. But with this IRS change, you’re only getting the employer contribution, which is half of what you get by investing up to the match.”
Kamel explained that he supports this for employees who use the program to invest while also aggressively paying off student loan debt, with the plan to invest more after the debt is paid off. But that may not be the case for some.
“I’ve been in the financial game long enough to know that lots of people who use this program will convince themselves that it’s their sole ticket to a dream retirement while making very little progress on their student loan debt,” he said.
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