Thin(k) About Your 401(k) Plan: SECURE Act – Treatment of Part-Time Employees
I know it seems a long time ago, but at the end of 2019, Congress passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act. The Act had a number of provisions, but I want to focus on the one aimed at part-time employees. This change will require employers to permit employees who work 500 hours for three consecutive years to save using the company’s 401(k) Plan. Employers are not required to match or make any contributions for these employees. However, if an employer does match or contribute, relevant vesting schedules apply.
This requirement effectively begins in calendar year 2021. Therefore 2024 would be the first year this group of employees would be allowed to contribute. It also means that companies will have to track and monitor this employment status beginning in 2021, something heretofore likely not done. As I type this in late October, I wonder how many companies are prepared to track this employee cohort starting in just a few months?
Let me know if I can help.
I found this article from Kiplinger very helpful: SECURE Act Basics: What Everyone Should Know
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