401(k)s for Long-term, Part-timers

SECURE Act in 2019 and SECURE Act 2.0 in 2022 changed participation rules for long-term part-time employees with respect to 401(k) plans. Instead of the usual 1,000 hours-of-service requirement for participation, which applies to full-timers, a 500-hour standard applies. Employees with more than 500 hours (but less than 1,000 hours) must have this for at least 2 consecutive years; they must be permitted to make salary deferral contributions starting in 2025. A 3-year rule applied starting in 2021, so that those having more than 500 hours in 2021, 2022, and 2023, must be permitted to participate in 2024. Proposed regulations clarify the rules for participation by long-term part-timers. #IdeaoftheDay