U.S. Rep. Terri Sewell (D-AL) introduced legislation in the House to reduce the number of years of service required for part-time workers to make retirement contributions.
The bill is called the Reducing the Maximum Service Requirement for Long-term Part-time Workers to Make Elective Deferrals to 401(k) Plans Act (H.R. 2944). It was included as part of the larger Securing a Strong Retirement Act of 2021 or the SECURE Act 2.0.
“This is a common-sense bill that will make it easier for part-time employees to begin contributing to their retirement accounts sooner in their employment,” Sewell said. “We know that Alabama’s working families are facing a retirement crisis. Too often, the incentives to save for retirement are designed to benefit the wealthy and the upper-middle class. This is a fundamental inequity in our tax code, and we must rebalance retirement incentives so that all working individuals can retire with dignity and financial security.”
This bill amends the requirement included in the 2019 SECURE Act. That bill said that employers maintaining a 401(k) plan must have a dual eligibility requirement under which an employee must complete either a one year of service requirement (with the 1,000-hour rule) or three consecutive years of service where the employee completes at least 500 hours of service.
Sewell’s legislation, H.R. 2944, reduces the three-year rule to two years, allowing part-time employees to begin saving for retirement sooner.
“I am also pleased that my bill was included in H.R. 2954, the SECURE Act 2.0, which passed out of the Ways and Means Committee this week,” Sewell said. “This larger package includes a number of provisions that will expand retirement coverage and increase participation in retirement savings by realigning savings incentives to benefit middle class and working-class families. In my district, where the median household income is $38,000 a year, saving for retirement can seem overwhelming.”