If you’re still not sure how the Setting Every Community Up for Retirement Enhancement Act of 2019 has already changed your credit union’s retirement plans, you’re forgiven. The law passed rather unexpectedly late in 2019 and parts of it went into effect almost immediately. But there’s still time to catch up and make sure your plan participants understand some new options the act gives them.
The SECURE Act affects defined contribution and defined benefit plans, individual retirement accounts, and 529 savings plans. Here are brief summaries of four key changes that 401(k) sponsors should know about.
1. Eligibility for long-term, part-time employees
Effective date: plan years beginning after Dec. 31, 2020 (but it’s a bit complicated)
Previously, plan sponsors could require at least 1,000 hours of work during a plan year for employees to be eligible to contribute to a 401(k) plan. The SECURE Act now requires that employees who have worked 500 hours in each of three consecutive plan years be eligible.
continue reading »