The benefits of the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) are set to extend to long-term part-time (LTPT) employees. This legislation obligates employers who facilitate 401(k) plans and have traditionally excluded LTPT employees, to allow these staff members to make elective deferral contributions under certain conditions. This marks a notable shift in policy and signals broader inclusivity in terms of retirement provision.
Designed to promote engagement with 401(k) plans, the SECURE Act seeks to broaden participation and ultimately improve retirement readiness across larger segments of the workforce. The changes under the Act are due to take effect during the plan year which commences on or after January 1, 2024.
By allowing LTPT employees to make elective deferral contributions, the SECURE Act recognises the changes in workforce composition and acknowledges the necessity of providing economic safeguards to these employees. It should be noted, however, that the Act does not require employers to provide matching contributions for LTPT employees. Consequently, the extent to which LTPT employees will benefit is subject to the specific policies of individual employers.
Though the SECURE Act has been enacted, it continues to pose some challenges to employers. They will now need to revise their policies and put adequate systems in place to ensure compliance with the legislation. It will require adjustments to administrative practices, tracking mechanisms and perhaps even the restructuring of compensation packages. The broader implications this legislation entails for organisations are yet to be fully understood.
For further insights into this topic, consider this in-depth examination by Ballard Spahr LLP.