The SECURE 2.0 Act of 2022 (SECURE 2.0) significantly changes the legal and administrative compliance landscape for U.S. retirement plans. Foley & Lardner LLP is authoring a series of articles that take a “deep dive” into key SECURE 2.0 provisions that will affect how employers structure and administer their 401(k) plans, pension plans, and other types of employer-sponsored retirement plans.
In our prior SECURE 2.0 articles, we’ve discussed student loans and 401(k) plan matching contributions, changes designed to simplify plan administration, changes to the minimum required distribution rules, and changes for small employer plans. In this article, we discuss how SECURE 2.0 expands access to 401(k) plan savings for certain long-term part-time employees.
We previously described the expansion of 401(k) plan access for long-term part-time employees in the February 19, 2020 and December 30, 2022 articles. Under the SECURE Act of 2019 (“SECURE 1.0”), 401(k) plan sponsors are required to allow employees who complete 500 hours in each of 3 consecutive years (“LTPTs”) to begin making elective deferrals starting in 2024. Effective for plan years beginning in 2025, SECURE 2.0 changed that requirement from three to two consecutive years of 500 hours. Neither of these rules apply to collectively bargained plans.
To better understand the changes enacted under SECURE 2.0, it may be helpful to recall the original rule under SECURE 1.0. For periods of service...
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