QOTW: LTPT Employee Eligibility

Three-fourths of respondents to our ICYMI Question of the Week already allow long-term, part-time (LTPT) employees to participate in the plan.

This is consistent, if a little higher, than data from our 63^rd annual survey (2019 plan year) where 70 percent allow salaried part-time workers to participate, and 63.7 percent allow hourly part-time workers to participate. There is variability by plan size though with fewer than 30 percent of large companies allowing hourly part-time workers to participate. This is a trend we will watch in the upcoming 64^th Annual Survey as companies make adjustments to eligibility provisions to comply with the new SECURE Act regulations.

The SECURE act, passed in 2019, includes a provision to provide eligibility to “long term, part-time” employees, aimed at increasing coverage for the increasing number of “gig” workers in our economy. LTPT workers are defined as employees who work 500 or more hours in a year for 3 consecutive years. The Act provides that LTPT employees be able to make contributions to the plan beginning in 2023. SECURE Act 2.0, which has been approved by the House Ways and Means Committee and is pending in the House, would lower that threshold from three years to two. Note that neither provision requires a company contribution of any kind, only the ability for LTPT workers to defer their own money.

The 25 percent of respondents not yet allowing LTPT workers to participate in the plan need to determine how they are going to administratively start tracking the hours and amend the plan to comply with the new required provisions.

Comments from readers regarding plan eligibility for LTPT workers:

- All participants participate in the DB and DC plans
- Anyone is eligible (with the exception of a few certain temporary job titles) regardless of hours worked
- As long as they work 1,000 hr/year
- Employees under 20 hours per week can contribute to a TDA plan.
- Hasn't negatively impacted annual testing results
- It's a great thing
- LTPT employees may participate in the plan, but they will not receive any vesting for service years where they worked under 1,000 hours per year.
- Our business has a seasonal component, we use this as a recruiting and retention strategy for those seasonal employees, who often come back year after year.
- Our plan allows any class of employee to be eligible for deferrals at 3 months of service
- Our plan document allows any employee that meets the age and days of service requirement to enter the plan.
- Participating with deferrals to their 401k. Not necessarily in company match or contrib unless over 1000 hours in the calendar year.
- There is no hours requirement on our plan, so part-time employees have been able to participate in the plan under the normal eligibility rules.
- They must work a minimum of 20 hours per week
- We allow all employees (part-time and variable hour) to participate in the deferral and 1 year waiting period for ER match.
- We allow part-timers from day one.
- We do not have an hours worked requirement to be eligible to participate.
- We never exclude part-time workers
- Must work 1,000 hours in a year to qualify for match under current provisions; our business does not have many part-time employees, but for the handful we have, they work between 20 - 30 hours per week.