IRS Provides Guidance on Long-Term, Part-Time Employees in 401(k) Plans

Under the SECURE Act, 401(k) plan sponsors will be required to have a dual eligibility requirement under which an employee must complete either a one-year-of-service requirement (with the 1,000-hour rule) or three consecutive years of service where the employee completes more than 500 hours of service.

The Internal Revenue Service has advised that all years of service with the employer or employers maintaining the plan must be taken into account for purposes of determining a long-term, part-time employee’s vesting, all years of service with the employer or employers maintaining the plan must be taken into account, including 12-month periods beginning before Jan. 1, 2021.

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