New Guidance on Rules for Long-Term, Part-Time Employees in 401(k) Plans
Highlights
The U.S. Treasury Department and the IRS have proposed regulatory rules for long-term, part-time employees’ 401(k) plan eligibility for plan years beginning on and after Jan. 1, 2024
A long-term, part-time employee is an employee who is eligible to make elective deferral contributions to an employer’s 401(k) plan when meeting certain criteria
These proposed regulations note which employees would and would not be covered by this rule, as well as special vesting, eligibility, and participation rules for these employees; public comments are due Jan. 24, 2024
On Nov. 27, 2023, the U.S. Treasury Department and the Internal Revenue Service (IRS) published proposed regulations addressing the new rules for long-term, part-time (LTPT) employees’ plan eligibility first established under the SECURE Act of 2019 and modified in the SECURE 2.0 Act of 2022 (SECURE 2.0). Under the SECURE Act, employers were required to expand plan eligibility to allow employees who worked at least 500 hours in three consecutive years to make deferral contributions to the 401(k) plan.
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