While everyone is talking about multiple employer plans as being changed by the SECURE Act, I think the biggest change that will affect 401(k) plan sponsors on day to day basis is the mandate that long term, part-time employees must be made eligible for the deferral portion of the plan after 3 consecutive years of completed 500 hours of service.<\/p>\n
Thankfully, plan sponsors don\u2019t have to start counting until 2021. The problem is getting them to understand they have to monitor these employees and consider whether part-timers should also be eligible for profit-sharing contributions. If not, then they will have two different eligibility requirements. I predict in the end, that many plan sponsors and third-party administrators will take far too long to get used to this new rule when it starts to count in 2024 (after 3 years of 500 hours of service). That means a lot of compliance errors and possible makeup QNEC contributions of it\u2019s caught too late.<\/p>\n
In the end, let\u2019s let plan sponsors know what will happen and develop a process to track it and properly notify the employees that may get to achieve this new liberal deferral eligibility requirements.<\/p>\n
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