Long-Term Part-Time Employees – Beginning with the 2024 plan year, long-term part-time employees who have attained age 21 and worked at least 500 hours per year for 3 consecutive years must be given the opportunity to make elective deferral contributions. While eligibility will not occur until the 2024 plan year, 2021 is the first year for which hours must be kept to determine if the 500 hours for 3 consecutive years requirement has been satisfied. It is important to note that these employees can be disregarded for non-discrimination testing purposes.
Pooled Employer Plans (PEP) – The SECURE Act established a new type of multiple employer plan (MEP) called a “pooled employer plan” (PEP). A PEP permits unrelated employers to come together to participate in one retirement plan that is administered by a “pooled plan provider” (typically a financial services company, recordkeeper, or third-party administrator). The SECURE Act allows pooled plan providers to start operating PEPs as early as January 1, 2021. Pooled plan providers must register with the Secretary of Labor and the Secretary of the Treasury prior to beginning operations.
Lifetime Income Disclosure – Under the SECURE Act, all defined contribution plans will be required to include a lifetime income illustration on annual participant benefit statements. The disclosure would illustrate the monthly payments the participant would receive if their total account balance were used to provide lifetime income streams. The DOL is expected to give more definitive direction to the format and content of the illustrations. Compliance is delayed until 12 months after additional guidance is provided by the DOL.
This newsletter is intended to provide general information on matters of interest in the area of qualified retirement plans and is distributed with the understanding that the publisher and distributor are not rendering legal, tax or other professional advice. Readers should not act or rely on any information in this newsletter without first seeking the advice of an independent tax advisor such as an attorney or CPA.
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