Already during this legislative session, lawmakers have introduced three bills — two in the Senate and one in the House — designed to reform America's complex retirement saving system. Of these, H.R. 2954, the 'Securing a Strong Retirement Act of 2021,' has advanced the farthest. Intended to build on the SECURE Act of 2019 , this so-called 'SECURE Act 2.0' contains 45 provisions that would simplify and expand access to retirement savings. Published analysis of the SECURE Act 2.0 has mainly focused on provisions pertaining to automatic 401(k) enrollment, required minimum distributions, catch-up contributions and student loans. This article instead focuses on some of the bill's less-talked-about provisions that could nonetheless have a significant impact on plan compliance.  

401(k) eligibility rules are changing — again

Until recently, retirement plan sponsors weren't required to track hours for part-time employees who work less than 1,000 hours per year. But the original SECURE Act introduced new eligibility rules dictating that part-timers who work 500 hours for three consecutive years must be allowed to participate in 401(k) plans alongside full-time employees. Plan sponsors began counting hours under the new system January 1, 2021. If the SECURE Act 2.0 passes, payroll processes may require further adjustment, because the new bill would further reduce the 401(k) service requirement to include part-timers who work 500 hours for only i consecutive years. Counting hours for part-time employees is not always straightforward. To relieve themselves of the administrative burden of counting hours, some plan sponsors may decide to extend eligibility to all part-time employees, regardless of hours worked. Others may choose to simpliy timekeeping by crediting part-time employees a fixed number of hours for each day or pay period worked. Regardless of their approach for tracking hours or using equivalencies, plan sponsors who have not already done so will need to coordinate with their recordkeepers, payroll providers and HR information system (HRIS) providers to make a plan for crediting part-time employees who work 500 hours or more.