With the passing of the Setting Every Community Up for Retirement Enhancement (SECURE) Act in late 2019, often forgotten since Covid impacted us shortly thereafter, eligibility requirements were broadened for 401(k) plans.
Previously, plans could exclude employees who worked fewer than 1,000 hours per year from participating in the plan. But under the new rules, effective for plan years beginning January 1, 2021, employees who work at least 500 hours in three consecutive 12-month periods and have attained age 21 must be allowed to participate in the company's retirement plan.
The first year of the three-year requirement begins in 2021 and will affect who can participate in the plan in 2024.
This means that HR/Payroll departments and systems must start measuring hours starting in about 50 days on 1/1/2021. Are your systems set-up for this?