WASHINGTON, D.C. — The Department of the Treasury and the Internal Revenue Service (IRS) recently released new guidance concerning long-term, part-time employees participating in 403(b) retirement plans. These plans, akin to 401(k) plans, are predominantly utilized by employees of charities and public educational institutions. The guidance, issued under the SECURE 2.0 Act, will take effect for 403(b) plans starting in 2025.
Notice 2024-73, a comprehensive document, includes a detailed question-and-answer section that clarifies how nondiscrimination rules apply to 403(b) plans concerning long-term, part-time employees. This section further explains the permissible exclusions from participation for part-time and student employees. The IRS and the Treasury Department’s goal is to ensure these plans are inclusive while maintaining compliance with federal regulations.
One of the key takeaways from the notice is the Treasury Department and the IRS’s plan to provide further guidance on section 125 of the SECURE 2.0 Act. This will include proposed regulations that are expected to address the areas covered in the current notice, offering employers and employees a clearer understanding of the upcoming regulatory landscape.
Additionally, the notice outlines that the final regulations for 401(k) plans, concerning long-term, part-time employees, will not be enforced earlier than January 1, 2026. This announcement follows the proposed regulation issued on November 27, 2023, which laid the foundation for these future rules.
The release of Notice 2024-73 marks a pivotal step in the ongoing adaptation of retirement plan regulations to meet the evolving needs of the workforce. As the Treasury Department and IRS continue to refine these rules, employers and plan administrators are urged to stay informed to comply with the new requirements and optimize the benefits offered to employees.
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