SECURE Act Reminder Regarding Certain Long-time Part-time Employees

Long-time part-time workers permitted to participate in 401(k) plans under the SECURE Act.

In September 2020, the IRS released Notice 2020-68 to provide guidance on several provisions of the SECURE Act, which was signed into law on December 20, 2019. One such provision requires 401(k) plans to permit employees who have worked at least 500 hours in each of the preceding, consecutive three 12-month periods to participate for plan years beginning on or after January 1, 2024. The tracking of such long-term, part-time employees by plan sponsors should begin on January 1, 2021.

Even though plans can disregard years of part-time service prior to January 1, 2021, for the purpose of elective deferral eligibility, all service with the employer (even part-time service prior to January 1, 2021) must be considered when determining a participant's vesting service. Such eligible employees (beginning in 2024) would not need to be included in testing for nondiscrimination and coverage requirements or application of the top-heavy rules.

Please contact your local Mutual of America representative with any questions regarding salary deferrals for long-time part-time workers.

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