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LTPT rules under Secure 2.0


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In Secure 2.0 there is a section on LTPT that references 2 years of 500 hour of serivce and it is set to take effect in 2025.

Does that override the current rules?  Or do we use 3 years of 500 hours UNTIL 2025 then scale back to 2 years?

QKA, QPA, CPC, ERPA

Two wrongs don't make a right, but three rights make a left.

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My best understanding at this point is that employees who worked 500 hours for 3 consecutive years from 2021 through 2023 will enter plans on 1/1/2024. Then, employees who work 500 hours for 2 consecutive years 2023-2024 will enter plans 1/1/2025, and any two consecutive years after that will enter the plan the following year.

Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance.

Corey B. Zeller, MSEA, CPC, QPA, QKA
Preferred Pension Planning Corp.
corey@pppc.co

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Aaargh! And here I was hoping we didn't have to worry about LTPT until 2025.

And FWIW, I just had your interpretations confirmed by a "big name" in this business. I hadn't read the actual Section until you brought it up, and sadly, I had to agree. I liked the summary I had read earlier, (which just pushed it off until 2025), a whole lot better... 

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Yeah, we're definitely in a state of SECURE summary overload with everyone rushing to get their piece out, so missing relevant details or nuances is not surprising.

Kenneth M. Prell, CEBS, ERPA

Vice President, BPAS Actuarial & Pension Services

kprell@bpas.com

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  • 3 weeks later...

Re-upping this. In ASPPA webcast yesterday, the presenters had a discussion after the slide on this subject was shown. What I understood (or misunderstood) them to say was that pre-2023 eligibility service was not ignored for 401(k) - only for 403(b), so that for 401(k) purposes, someone who had 500 hours in, say, 2022 and 2023, but not in 2024, would enter on 1/1/2025. Did anyone else watch this, and if so, did you hear the same thing?

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3 hours ago, Belgarath said:

Re-upping this. In ASPPA webcast yesterday, the presenters had a discussion after the slide on this subject was shown. What I understood (or misunderstood) them to say was that pre-2023 eligibility service was not ignored for 401(k) - only for 403(b), so that for 401(k) purposes, someone who had 500 hours in, say, 2022 and 2023, but not in 2024, would enter on 1/1/2025. Did anyone else watch this, and if so, did you hear the same thing?

I got the same thing. I appreciated Bob giving that example.

William C. Presson, ERPA, QPA, QKA
bill.presson@gmail.com
C 205.994.4070
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Yeah, me too. I missed this little detail entirely. So Gilmore - looks like you had it right! I did send this question to ERISApedia for their Q&A session (late February) just to see if they concur.

On 1/6/2023 at 7:48 PM, Gilmore said:

I'm assuming this also means that an ee with 500 hours in 2021 and 2022, but not 2023 or 2024 would be eligible as a LTPT on 1/1/2025?

 

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Nice.  Funny, I was just rereading that section to update my chart and made a note that it did seem that the pre-2023 service would count in a 401(k).  Appreciate the update and also sending the question for the upcoming ERISApedia session.  I've signed up for that one as well.  Thanks very much.

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2 hours ago, Gilmore said:

I wouldn't be too hard on yourself.  I just read the ASPPA update that a technical error has now eliminated all catchups effective for January 2024.

David Levine from Groom said about an hour ago on a PSCA committee call that he thinks there is an argument that this isn't the case (albeit a little convoluted in his approach) involving language that does exist with respect to catch-ups that "notwithstanding any other section" - and then goes on to "authorize" catch-ups.  I believe he is interpreting the "notwithstandy any other section" to also mean "notwithstanding the lack of any other section."  He didn't provide the particulars - but be on the lookout ....

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