Part of the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 is an effort to expand retirement plan coverage to part-time workers. Here are a few details you need to know before you act:
- To be eligible, employees must work between 500 and 999 hours per year for three consecutive years.
- The new rule only applies to elective deferrals; a plan can impose a service requirement that excludes many part-timers.
- A plan may impose age requirements for eligible employees.
- It applies to all 401(k) plans, but not other types of elective deferral plans (such as 403(b) and 457(b) plans).
- You need to start tracking hours beginning next year.
While employers should attend to this rule now, experts don’t expect “droves” of part-timers contributing to plans. Therefore, they say, average account balances shouldn’t be negatively affected.
