In the past, part-time employees haven’t been given the opportunity to receive matching contributions with employer retirement accounts.
However, as a provision of the SECURE 2.0 act, the eligibility rules have changed – while the requirements haven not. Currently, long-term part-time employees (those who work 500 hours a year for two consecutive years) can participate in plans but employers don’t have to offer a match.
However, offering your employees a 401(k) match can be a good thing.
In the past, employers have been able to require that employees work a minimum of 1,000 hours to get a company match, But SECURE now requires employers that offer 401(k) plans to allow these long-term part-time employees to make elective deferral contributions into their workplace retirement plan.
Still, employers don’t have to offer a employer contributions, or matching, for long-term part time employees – but they can if they choose.
So, why choose to offer this? There are many reasons, including:
- Recruiting and retention: Many employees are looking for companies that will help them reach their retirement goals.
- Tax benefits for employers: Matching contributions are deductible on a company’s federal income tax return – provided it’s within a regulated limitation.
Currently, data is being gathered from the annual Plan Sponsor Council of America survey – hoping there will be more information forthcoming on the percentage of plans that provide employer contributions to part-time workers soon.
A previous survey conducted by the PSCA found that 70% of plans that previously excluded part-time workers now allow them to participate also provide matching contributions – which is promising!
As many employees are concerned about saving enough for retirement, this is a great trend.
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If you have other questions about retirement plan loans, email us or call 937.308.0758.
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