2019 has brought a number of changes to retirement plan rules. From legislative changes made to financial hardships, to an increase in annual contribution limits, there have been changes to retirement plans impacting both Plan Sponsors and Plan Participants. Along with these changes comes a new IRS guidance regarding the eligibility provisions for 403(b) Plans.
The new guidance is specific to Plans that include an elective deferral eligibility exclusion in the plan document for employees working 20 hours or less per year. Plan Sponsors who adopted this exclusion are required to monitor the hours worked of excluded employees each year. Those employees who achieved 1,000 hours a year (i.e. 20 hours a week), are then eligible to make elective deferral contributions. The new guidance clarifies that once a participant achieves the required hours worked, they are eligible to contribute to the 403(b) Plan from that point on; therefore, once in, always in. Plan Sponsors will also need to reflect this change to their plan document.
If you have any questions surrounding the new guidance or if you are curious how this might impact your Plan, contact ADMIN Partners at 877-484-4400, option 2.