The SECURE Act introduced the concept of a “long-term, part-time employee.” Starting in 2021, 401(k) plans are going to need to consider these employees for eligibility, vesting, and company contribution purposes, as they become eligible in 2024.
A “long-term, part-time employee” is any employee who in each of the last three consecutive years (long term) worked at least 500 but less than 1000 hours. For eligibility purposes, only those years starting in 2021 are counted. That means that the first year any long-term, part-time employee will be required to be eligible for the 401(k) Plan is 2024. They will be eligible for the deferral component and plan sponsors can still require 1,000 hours of service for employer contribution purposes.
Plans are going to need to ensure they can track hours appropriately to make sure they identify who will be eligible.