Two Years to Long-Term, Part-Time 401(k) Plan Eligibility in 2025

Do you have part-time employees who work at least 500 (but fewer than 1,000) hours during the year? If so, remember to check each person’s eligibility under the shortened two-year long-term, part-time eligibility rule.

For 2024 plan entry dates, the alternate path to participation for long-term, part-time employees required 500 or more hours in each of three consecutive computation periods (and attainment of age 21 if also required by your plan). However, the SECURE 2.0 Act of 2022 shortened this requirement to two consecutive years. This means that employees who do not meet your plan’s regular eligibility criteria may be eligible to participate after two consecutive years of service starting on January 1, 2025.

As you count hours of service for eligibility purposes, continue to check eligibility under the alternate long-term, part-time rules using the shortened service requirement. Review details about how the rule works on the Counting Hours of Service page of the BA Guide. You must offer participation to anyone eligible under the long-term, part-time rule immediately after they complete their second consecutive year with 500 or more (but fewer than 1,000) hours of service, meaning that the plan entry date for long-term, part-time participants is January 1.

Report any employees eligible under this new rule to NRECA’s Employee Benefit Services team in one of two ways:

• Send an email to ebsmailbox@nreca.coop or through the secure Message Center, or
• Contact the Member Contact Center at 866.673.2299 or at contactcenter@nreca.coop

Be sure to include the employee’s name and hours worked for all applicable computation periods. NRECA will add the participant to the system, noting that he or she is a long-term, part-time participant.

If you have questions about long-term, part-time eligibility after reviewing the rules, call the retirement compliance team at 866.673.2299, option 7.