​If you maintain a 401(k) plan (“Plan”), Section 112 of the Setting Every Community Up for Retirement Enhancement Act of 2019 (“SECURE Act”) imposes new rules for Plan participation by your part-time employees if they work at least 500 hours over three consecutive 12-month periods and satisfy any applicable age requirement. These new rules impose new recordkeeping requirements for your Plan beginning January 1, 2021.

Here are the highlights:

• Under pre-SECURE Act eligibility rules, a Plan could exclude any part-time employee who did not complete at least 1,000 hours of service in any eligibility computation period; and a year of vesting service was generally based upon the completion of 1,000 hours of service during any vesting period. 
• Your Plan must now permit part-time employees who work at least 500 hours over three (3) consecutive 12-month periods that begin on or after January 1, 2021 and satisfy any applicable age requirement (“long-term, part-time employees”) to make elective deferrals – pre-tax or, if applicable, Roth contributions. 
• If your Plan has an eligibility requirement based on age (usually age 21), a long-term, part-time employee would become eligible on the later of reaching that age and the end of the applicable three-year period. 
• Any consecutive 12-month period beginning before January 1, 2021 is not included for purposes of determining long-term, part-time employee status.
• Plan participation by any long-term, part-time employee will not begin under a calendar-year plan until January 1, 2024.
• While long-term, part-time employees must be permitted to make pre-tax or, if applicable, Roth contributions (which are always fully-vested), your Plan is not required to provide matching contributions or profit-sharing contributions until a long-term, part-time employee satisfies your Plan’s service and age requirements for such contributions (generally, the later of completing 1,000 hours of service in any 12-month consecutive period and reaching age 21).
• If a long-term, part-time employee subsequently becomes eligible for employer contributions subject to a vesting schedule, then all years in which they work at least 500 hours (even years before January 1, 2021) must count for vesting, excluding years of service worked before age 18. 
• Long-term, part-time employees do not have to be included when performing  nondiscrimination, top-heavy and minimum coverage tests.
• These new rules for long-term, part-time employees do NOT apply to collectively-bargained employees. 
• While the first 12-month consecutive period for tracking hours of service for part-time employees begins in 2021, Plan amendments to reflect these new rules are not required until the last day of the first Plan year beginning on or after January 1, 2022.