New IRS Regs on 401(k) Eligibility for Long-Term Part-Time Employees: Key Issues and Next-Steps for Plan Sponsors

Strafford

This CLE webinar will provide employee benefits counsel and plan sponsors guidance on new IRS regulations for 401(k) eligibility for long-term part-time (LTPT) employees. The panel will discuss key provisions of the new IRS regulations and the impact on eligibility and participation requirements, determining whether an employee is an LTPT employee, vesting requirements for LTPT employees, and other notable items.

Description

On Nov. 27, 2023, the IRS issued proposed regulations regarding eligibility requirements for LTPT employees under Section 401(k) of the IRC. These regulations provide guidance on determining who are LTPTs, requirements for plan participation, and other critical items that employee benefits counsel must understand in advising plan sponsors and administrators.

Prior to these regulations, plan sponsors were allowed to exclude part-time employees from 401(k) plan participation if such employees had not reached the age of 21 or completed at least 1,000 hours of service within a 12-month period. However, since the enactment of the SECURE Act and SECURE 2.0, such requirements have been reduced along with other special rules for participation for LTPT employees.

The new regulations contain certain items critical to LTPT employees, such as eligibility requirements regardless of the employer's classification of the employee, the impact on those considered to be former LTPT employees, methods for crediting service, vesting, and other key items.

Listen as our panel discusses key provisions of the new IRS regulations and the impact on eligibility and participation requirements, determining whether an employee is an LTPT employee, vesting requirements for LTPT employees, and other notable items.

Outline

1. Recent IRS guidance for LTPT employees in defined contribution plans
2. Impact of SECURE Act and SECURE 2.0
3. Determining who are LTPT employees
4. LTPT employee eligibility for plan participation
   1. When they can begin participating
   2. Counting hours
   3. Acceptable methods for crediting service
   4. Vesting
5. Contributions
6. Next steps for plan sponsors and administrators

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