JANUARY 2024 EMAIL TO CLIENTS

SPOTLIGHT

Enrolling Long-Term Part-Time Employees

If you employ part-time employees, it’s important you understand the Long-Term Part-Time rules that became effective January 1, 2024. Long-term part-time employees who weren’t previously eligible may now have an opportunity to make salary deferral contributions to your plan.

Historically, 401(k) plans could require employees to work at least 1,000 hours during a year to become eligible to enter the plan. With that requirement, some part-time employees would never meet the eligibility criteria. The SECURE Act of 2019 (or SECURE 1.0) expanded coverage to allow those who had worked at least 500 hours in three consecutive years to participate under a plan’s salary deferral provision. SECURE 2.0, signed into law in December 2022, then shortened this wait to two years. Read more.

HOW WE CAN HELP

If you employ long-term part-time employees, keeping track of their eligibility could be time-consuming. A 3(16) administrator can track employee eligibility for you and make sure newly eligible employees receive all the required notices and enrollment materials. Ask your Definiti Retirement Plan Consultant (RPC) for more details, or call 1-888-912-3653 or email sales@definiti.com.

THINGS TO KNOW

Reminder: The Census Due Date Is Approaching

Your Definiti RPC recently emailed plan sponsors whose plan year ends December 31 with a reminder of the upcoming deadline to collect annual plan information and employee census data. The information we need includes the names, pertinent dates, compensation, deferrals, etc., for all employees who received a W-2 in 2023, regardless of their employment or eligibility status.

We use Plan Sponsor Link to make this annual data submission process easy. You’ll want to refer to your RPC’s email for instructions on how Definiti collects your plan’s census information online. If you don’t have your RPC’s original email handy, let them know.

Here are some other helpful notes about how Definiti collects census information:

• Complete the annual questionnaire online and upload census data via PlanSponsorLink to Definiti within 30 days of the plan’s year end. For calendar plan years, this due date is January 31st.
• Form 5500 must be filed (without an extension) seven months after the plan year ends. For calendar year plans, that due date is July 31st.
• Definiti will automatically file an extension for Form 5500 if we don’t receive all the needed information from you in time. Keep in mind that an extension fee may apply in accordance with your service agreement.
• Our Insights article, Retirement Plan Census Data – It’s Foundational and Fundamental, provides more information on how accurate, timely census data collection helps Definiti administer your plan efficiently and accurately.

Preparing for SECURE 2.0 Provisions

SECURE 2.0 included 90+ provisions that could impact plans in the future. While we’re awaiting further guidance from the IRS on some of the provisions, Definiti is working behind the scenes to make sure we’re ready to help you implement any required changes. We’ll share more details soon.

In the meantime, visit our SECURE 2.0 webpage for timely news on deadlines, provision details and recent updates.

QUESTIONS? CONNECT WITH YOUR RPC OR CONTACT US

Your Definiti RPC is your first and best resource for information about your plan. Reach out to them with questions, and they’ll be happy to help. Or if you’re currently not a Definiti client, call 1-888-912-3653 or email sales@definiti.com for information about our services.