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New Mandate Allowing Long-Term Part-Time Employees Into 401(k) and 403(b) Plans Takes Effect

Journal of pension planning and compliance, 2024-07, Vol.50 (2), p.17-31

Copyright Aspen Publishers, Inc. Summer 2024 ;ISSN: 0148-2181

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  • Title:
    New Mandate Allowing Long-Term Part-Time Employees Into 401(k) and 403(b) Plans Takes Effect
  • Author: Sharara, Norma ; Vines, Joan
  • Subjects: Compliance ; Cost control ; Deferred compensation ; Employees ; Employers ; ERISA ; Part time employment ; Retirement plans
  • Is Part Of: Journal of pension planning and compliance, 2024-07, Vol.50 (2), p.17-31
  • Description: SECURE is the latest in a steady stream of bipartisan federal legislation aimed at increasing workplace retirement savings, going back to the Employee Retirement Income Security Act of 1974 (ERISA), the Tax Reform Act of 1986, the so-called "GUST" changes in the law (GATT, USERRA, SBJPA, and TRA 1997), the Economic Growth and Tax Relief Act of 2001 (EGTRRA), and the Pension Protection Act of 2006 (PPA). The 1RS subsequently extended the plan amendment deadline to the end of the 2026 plan year (2028 for union plans and 2029 for governmental plans).6 However, 401(E) plans must operate in compliance with the applicable changes in the law for all plan years, starting with the effective date of the change. [...]calendar year 401(k) plans that failed to communicate eligibility to LTPT employees before their first paycheck in January 2024 (or fiscal year plans that failed to communicate such eligibility before the first paycheck in the 2024 plan year) have a disqualifying operational failure that will require plan corrections. [...]safe harbor 401(k) plans require mandatory notices regarding the ability to make salary deferrals that generally must be provided at least 30 days before the start of the new plan year. The new rules are especially significant for employers in industries that rely on a part-time workforce with significant job turnover, such as restaurants, retail businesses, health care organizations, hotel or hospitality establishments, construction businesses, and agricultural operations. [...]collectively bargained employees and nonresident aliens with no U.S.-source income can be excluded from tax-qualified retirement plans.11 To improve access to workplace retirement savings plans, SECURE requires 401 (k) plans to allow employees who have worked at least 500 hours (but less than 1,000 hours) to make elective deferrals to the plan. [...]if an employee had 500 hours of service in 2021, 2022, and 2023 (but never had 1,000 hours of service per year), that employee must be allowed to make salary deferrals into the employer's 401 (k) plan starting with the first plan year beginning on or after January 1, 2024.
  • Publisher: New York: Aspen Publishers, Inc
  • Language: English
  • Identifier: ISSN: 0148-2181
  • Source: AUTh Library subscriptions: ProQuest Central
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