Long-term, part-time employees (LTPTE) is a high-profile SECURE 2.0 provision sparking client curiosity and generating intense interest. It was also the subject of a Feb. 26 general session at the 35th Annual NTSA Summit in San Diego.
Moderator Maggie Younis, National Director of Retirement Plan Services with Lincoln Financial Group, as well as panelists Kelsey Mayo, Director of Regulatory Affairs at the American Retirement Association, and Sue Diehl, President of PenServ Plan Services lamented the release of the proposed LTPTE regulation on Black Friday of last year, a mere 25 working days before its effective date.
“We received the information on the qualified plan regulations, and that didn’t give TPAs, employers, or anybody much time to make immediate changes,” Diehl said. “The big thing to understand, too, is that a lot of times what the rule was really promoting, even though it wasn’t their intent, was really to avoid having part-time employees altogether.”
“Hopefully, we will have more time on 403(b)s,” Mayo added. “Hopefully, we will also get some transition relief for those of you in the 401(k) space as well. All of that is yet to come. We’re trying desperately to advocate for the fact that people need time to understand the rule, to go out to clients to work with the system. It all takes time. You can’t give 25 working days.”
Mayo also pointed to the LTPTE vesting rule, which she said will take a “massive system reprogramming,” as part-time employees may vest faster than full-timers because the latter will vest at 500 hours.”
“One of the takeaways is that once you have a long-term, part-time employee, they will always be long-term part-time,” Diehl noted. “That’s the problem we have with 401(k)s. There wasn’t enough time to do anything to come into 2024. Kelsey is saying that if the plans are amended now so everybody can defer, you will never be a long-term, part-time employee.”
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