SECURE 2.0 Long-Term Part-Time Employee Rules: 401(k) Eligibility for Part-Time Workers in 2026

Part-time workers have historically been locked out of employer 401(k) plans entirely, since most plans required a full year of service at roughly 1,000 hours before allowing any employee to contribute. SECURE 2.0 changed that specifically for long-term part-time employees, and the rule is now fully in effect.

The New Eligibility Threshold

Starting with plan years beginning in 2025, 401(k) and 403(b) plans must allow long-term part-time (LTPT) employees to make their own elective salary deferrals once they’re at least age 21 and have completed two consecutive 12-month periods with at least 500 hours of service each. That 500-hour threshold works out to roughly 10 hours a week across a 50-week year — far below the standard 1,000-hour, one-year eligibility rule that still applies to determine full plan participation, including any employer match formula.

Why the Timeline Runs Longer Than It Looks

SECURE 2.0 originally required three consecutive years of 500-plus-hour service before shortening it to two years for plan years starting in 2025 and later. Because the rule counts consecutive 12-month periods, an employee who worked at least 500 hours in both 2025 and 2026 becomes eligible to start deferring in the 2027 plan year (or sooner, depending on the specific plan’s entry-date rules) — not immediately upon hitting the second year.

What This Rule Does and Doesn’t Guarantee

The rule guarantees access to make your own salary deferrals once you qualify; it does not guarantee an employer match on those deferrals, since employers can generally still exclude LTPT employees from matching contributions and most vesting schedule calculations, subject to certain nondiscrimination limits. A part-time employee’s eligibility, once earned, also isn’t undone by a later year where they work under 500 hours — the eligibility, once triggered, generally sticks.

What to Actually Check If You’re a Part-Time Worker

If you’ve worked part-time hours at the same employer for two or more years, ask HR or the plan administrator directly whether you’ve crossed the LTPT threshold rather than assuming you’re excluded because you’re not full-time — many part-time and seasonal workers are eligible under this rule and simply aren’t aware of it. For the broader plan design context this eligibility rule sits inside, see our Safe Harbor vs. traditional 401(k) plan design guide.

Written by Samuel, Certified Public Accountant

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