The SECURE Act requires that for plan years beginning after December 31, 2020, long-term, part-time employees must be allowed to make elective deferrals to an employer’s 401(k) plan after reaching age 21 and completing at least 500 hours of service during three consecutive 12-month periods. The Notice clarifies that employers can exclude 12-month periods beginning before January 1, 2021, for purposes of this new requirement.
Employees who become eligible under this special rule for long-term, part-time employees only need to be given the opportunity to make elective deferrals; they can still be excluded from matching and profit-sharing contributions unless and until they meet the plan’s current eligibility service requirement for those contributions.