A Long-Term, Part-Time Employee or Not a Long-Term, Part-Time Employee, That Is the Question

By , , and on January 25, 2024

Under the SECURE Act and the SECURE 2.0 Act, employers must provide long-term, part-time employees the opportunity to make elective deferrals under their 401(k) plans and, beginning in 2025, their 403(b) plans. This new rule is fraught with complexity and has generated numerous questions about how the requirements apply. But in talking about the new rule, we often do so in simpler terms by focusing on the anticipated impact on employees working more than 500 hours (often thought of as the new eligibility threshold) but less than 1,000 hours (often thought of as the old eligibility threshold).

For the most part, that’s fine. In fact, doing so provides a helpful and, in some cases, necessary shorthand for discussing the primary differences between the long-understood old eligibility rule and the more complicated new one. However, because certain special rules apply to employees who enter an employer’s plan as long-term, part-time employees, it is important for all employers to understand when an employee is a long-term, part-time employee.

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Sarah L. Engle
Sarah Engle focuses her practice on employee benefits matters. She counsels clients regarding a variety of issues, including the design, drafting and operation of tax-qualified pension and profit sharing plans, health and welfare arrangements, and deferred compensation plans. Sarah has experience advising clients on employee benefits design, implementation and transition matters arising in connection with corporate mergers and acquisitions. Read Sarah Engle's full bio.

Brian Tiemann
Brian J. Tiemann counsels public and private companies on a broad range of employee benefit matters, including matters related to pension plans, 401(k) plans and executive and incentive compensation. He advises plan fiduciaries with respect to their fiduciary duties, investment policies and alternative investments. He also advises multinational clients on global employee benefits matters, particularly with respect to global incentive compensation plans. Brian has extensive experience negotiating investment management agreements and service provider agreements. Read Brian Tiemann's full bio.

Haley Dow
Haley M. Dow focuses her practice on employee benefits and executive compensation matters. Read Haley M. Dow's full bio.

Scott Kenkel
Scott Kenkel focuses his practice on employee benefits and executive compensation matters. He has experience assisting clients with regulatory compliance matters related to tax-qualified retirement plans and executive compensation arrangements. He also regularly works with clients on benefits and compensation issues in connection with corporate transactions. Read Scott Kenkel's full bio.




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