Stemming from the SECURE Act, 401k plans including solo 401k plans will need to be offered to “long-term” part-time employees starting on January 1, 2024.
Definition of A “long-term” part-time employee:
It is a W-2 employee who is at least 21 and works at least 500 hours each year for 3 (three) consecutive years beginning January 01, 2021.
Illustration:
A W-2 employee who works at least 500 hours in the 2021, 2022 and 2023 plan years will be immediately eligible to join the solo 401k plan for purposes of making elective deferrals effective January 1, 2024 (for calendar year plans).
Lastly, this new rule applies to employee contributions only not profit sharing contributions also known as employer contributions.
Definition of A “long-term” part-time employee:
It is a W-2 employee who is at least 21 and works at least 500 hours each year for 3 (three) consecutive years beginning January 01, 2021.
Illustration:
A W-2 employee who works at least 500 hours in the 2021, 2022 and 2023 plan years will be immediately eligible to join the solo 401k plan for purposes of making elective deferrals effective January 1, 2024 (for calendar year plans).
Lastly, this new rule applies to employee contributions only not profit sharing contributions also known as employer contributions.
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