Treasury, IRS Issue Guidance on Long-Term, Part-Time Employees in 403(b) Plans

The Treasury Department and the IRS issued guidance on Oct. 3 that addresses long-term, part-time employees in 403(b) retirement plans under the SECURE 2.0 Act, which applies to 403(b) plans beginning in 2025.

In addition, Treasury and the IRS announced a delayed applicability date for related final 401(k) regulations.

403(b) plans are similar to 401(k) plans but are generally for employees of charities and public schools.

Notice 2024-73, which was released last Thursday, includes a question-and-answer section on the application of the nondiscrimination rules for 403(b) plans with respect to long-term, part-time employees, including application of the rules to permitted exclusions from participation for part-time employees and student employees.

The notice says that the Treasury Department and the IRS plan to issue additional guidance with respect to Section 125 of the SECURE 2.0 Act, including proposed regulations pertaining to the rules in Thursday’s guidance.

Notice 2024-73 also announces that the final regulations the Treasury Department and the IRS plan to issue for 401(k) plans on long-term, part-time employees will apply no earlier than to plan years beginning on or after Jan. 1, 2026. A proposed regulation related to the rules for long-term, part-time employees in 401(k) plans was issued on Nov. 27, 2023.

The notice provides details on how to submit comments on the guidance for long-term, part-time employees in 403(b) retirement plans.