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I Think I’ll Stay Here a While Longer: New Eligibility Rules for Long-Term Part-time Employees Are Around the Corner

December 19, 2023 (3 min read)

Qualified retirement plans can require that employees perform a certain number of hours of service before being eligible to participate in the plan. So requiring 1,000 hours in a year of service kept part-time employees out of most plans. The SECURE Act (now, fondly, SECURE 1.0), enacted in late 2019, changed that, requiring plans to allow part-time employees to participate if they completed at least 500 hours in each of three consecutive years. That rule takes effect January 1, 2024. Individuals who might qualify are referred to as long-term part time (LTPT) employees. See how the SECURE 2.0 Act, which takes effect January 2025, will make it even easier for part-timers to participate.

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  • Counting Service in Retirement Plans
    Counting service isn’t much fun, so consider whether use of the “elapsed time” method of tallying service may be an easier solution. Using the elapsed time method, it’s dates of employment that matter, and not hours of service.

Practical Guidance Updates 
Featuring the latest updates from your Practical Guidance account.    

  • Employee Benefits & Executive Compensation Key Legal Developments Tracker
    Stay informed on new developments.
    • IRS issues the 2023 Form 5500 series, including Form 5500, Form 5500-SF, Form 5500-EZ, schedules, and Instructions. Key revisions for 2023 reflect SECURE Act provisions like: (1) new Schedule DCG for defined contribution group reporting entities; (2) new Schedule MEP for multiple employer retirement plan information; (3) changes to how defined contribution plan participants are counted for small plan reporting purposes; and (4) new compliance questions for tax-qualified retirement plans. IRS Form 5500 Corner; EBSA Fact Sheet.
    • Retirement Plans. IRS and Treasury issue proposed regulations that would amend Treas. Reg. § 1.401(k)–5 to set forth rules and definitions applicable to long-term, part-time employees under section 112 of the SECURE Act and sections 125 and 401 of the SECURE 2.0 Act. 88 Fed. Reg. 82796 (Nov. 27, 2023).


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