Who should be eligible for my 401(k) program?2/5/2020
Retirement security. Sounds great, right?
That’s the goal of a new law regarding retirement savings; on Jan. 1, the SECURE Act – entailing a variety of changes to retirement accounts including 401(k)s, 403(b)s, IRAs and others – went into effect.
One highlight for employers is the change to eligibility requirements. Prior to 2020, employers didn’t need to extend eligibility to employees who worked fewer than 1,000 hours. Under the SECURE Act, employees may also qualify if they work 500 hours a year for three consecutive years. While that’s great for part-time workers, tracking eligible employees has gotten tougher. Employers may consider extending eligibility beyond the minimum required by the SECURE Act to eliminate some of the calculation and admin burden. Another highlight: if you set up a plan that automatically enrolls employees, you can file for a tax credit of up to $5,000. ♦