SECURE Act FAQs: Rules for Long-Term, Part-Time Employees

As of January 1, 2021, plans that require one year of service with 1,000 hours to qualify for participation will be required to track hours for part-time employees who work(ed) 500 – 999 hours. These “long-term, part-time” employees will be eligible to make salary deferral contributions on January 1st of the year following three consecutive years with over 500 hours of service.

As part of an effort to help all workers save for their own retirement, the SECURE Act made long-term, part-time employees eligible to enter their employer sponsored plans. Specifically, this is for long-term, part-time employees and for deferral sources only. No employer contribution is mandatory.

Long-term, part-time employees are defined as those employees working at least 500 hours, but less than 1,000 hours for three consecutive plan years.

It may. If you have employees who meet the long-term, part-time employee requirements, you must allow them to participate in the deferral portion of your plan.

Yes. Make sure to include all hired employees and their hours in your annual census, regardless of their full-time or part-time status.

A good rule of thumb is to have your census match your W-2s for the year. If you are only providing full time employees on your census or including only those employees deferring on your payroll files, you may want to review further for those employees who are seasonal or part-time not normally included.

You do not have to go back any further than 2021 records, as the calculation period begins January 1, 2021. You can begin your review as you prepare your 2021 census.

Yes. We can amend your plan to remove the hours requirement while keeping your service requirement of 12 months. Alternatively, we can amend your plan to shorten your service requirement; i.e., one month, three months, or six months. We will not charge you for a plan amendment due to this legislation.

Ubiquity is currently working on a solution to track long-term, part-time employees in our software. Until this functionality is in place, you will be required to track your part-time employees’ hours separately and categorize them as “long-term, part-time” employees beginning in 2021.

Click here for more information on the legislation and how this will affect your plan.