Long-Term Part-Time Employee 401(K) Participation
The SECURE Act of 2019 requires employers to allow long-term, part-time workers to participate in the employers’ 401(k) plans.
That provision provides that – except in the case of collectively bargained plans – employers maintaining a 401(k) plan must have a dual eligibility requirement under which an employee must complete:
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1 year of service (with the 1,000-hour rule) or
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3 consecutive years of service (where the employee completes at least 500 hours of service).
SECURE 2.0 Act Section 125 effective after December 31, 2024, makes the following changes:
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Reduces the 3-year rule to 2 years.
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Pre-2021 service is disregarded for vesting purposes.
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Extends the long-term part-time coverage rules to 403(b) plans that are subject to ERISA. Effective Date: After December 31, 2024