SECURE 2.0 now allows more access to retirement plans for part-time employees, however, there has been some uncertainty for employers as to which employees exactly qualify. Now, the Department of the Treasury and the Internal Revenue Service issued guidance last week addressing long-term, part-time employees in 403(b) retirement plans under the SECURE 2.0 Act, which applies to 403(b) plans beginning in 2025 for employees employed by colleges and universities, charities and public schools.

Per a SECURE 2.0 provision, part-time employees' eligibility to participate in a company's retirement plan has been moved ahead from three years to two years, and the requirement for hours worked per year has been decreased from 1,000 to 500 hours a year. Employees who worked at least 500 hours a year for two consecutive years are eligible for a retirement plan, effective for plan years beginning after December 31, 2024.

IRS' new 11-page notice includes a question-and-answer section on the application of the nondiscrimination rules for 403(b) plans with respect to long-term, part-time employees, including application of the rules to permitted exclusions from participation for part-time employees and student employees.