The SECURE 2.0 Act introduced long-term part-time (LTPT) employee eligibility requirements that took effect on January 1, 2025, and brokers are now actively helping clients manage these rules. Employers must track part-time employee hours more closely and ensure eligible LTPT employees are offered access to their 401(k) plans.
Under SECURE 2.0, employees who work at least 500 hours per year for two consecutive years must be allowed to participate in their employer’s 401(k) plan. While the law was passed in 2022, LTPT eligibility is an active compliance obligation for employers today.
For brokers, this shift presents both responsibility and opportunity: guiding clients through execution while reinforcing their role as trusted advisors.
In this article, you will see how:
- Understand when LTPT eligibility applies, including the difference between effective dates and plan year administration
- Identify the most common LTPT compliance challenges for SMBs, particularly around hour tracking and plan amendments
- Guide clients through ongoing LTPT compliance steps with clarity and confidence
- Simplify LTPT administration using PrestigePEO’s tracking, plan integration and compliance support
What LTPT Eligibility Means for Brokers and Their Clients
LTPT eligibility expands retirement plan access for part-time employees who were historically excluded, while introducing new administrative responsibilities for employers. These responsibilities center on hour tracking, plan amendments and employee communication, which are areas where many businesses need support.
For brokers, understanding how these requirements work in practice is essential. LTPT compliance is not a one-time exercise; it requires ongoing oversight, accurate documentation and clear guidance to help clients remain aligned year after year.
What Brokers Need to Know Now
The SECURE 2.0 500-hour, two-year LTPT rule is in effect, meaning employers must actively track part-time employee hours across multiple years.
Many businesses lack the systems needed to manage this manually, increasing the risk of missed eligibility or incomplete documentation.
For brokers, this is the right time to help clients establish sustainable processes that support ongoing LTPT compliance rather than reactive fixes.
Key LTPT Takeaways and Compliance Considerations
LTPT eligibility is a standalone SECURE 2.0 requirement with clear operational implications. Brokers should ensure clients understand:
- Which part-time employees meet the 500-hour, two-year threshold
- How hours must be tracked and documented annually
- When and how plan documents must be amended to reflect LTPT eligibility
- The importance of communicating eligibility changes clearly to affected employees
Unlike other SECURE 2.0 provisions, LTPT eligibility directly affects who must be offered plan participation, making it an immediate and ongoing priority for employers.
The traditional small-group model often employs a one-size-fits-all approach, which fails to address the diverse and specific needs of a varied workforce or industry.
Effective Date vs. Plan Year: What Brokers Should Clarify
One common point of confusion for employers is the difference between when LTPT eligibility became effective and when eligible employees actually entered the 401(k) plan.
LTPT eligibility became effective January 1, 2025, which means employers must now look back at historical hours to determine which part-time employees have met the 500-hour, two-year threshold. However, being eligible does not always mean immediate plan entry. When an LTPT employee can begin participating may depend on the plan’s entry dates and existing plan provisions.
For brokers, this distinction is important because it affects how eligibility is administered, not whether it applies.
Brokers should be prepared to help clients:
- Confirm when LTPT employees become eligible based on hours worked
- Understand how plan entry dates apply once eligibility is met
- Ensure historical hour tracking supports accurate eligibility determinations
By clarifying this upfront, brokers help employers avoid missed eligibility, while ensuring LTPT employees are added to the plan in accordance with the plan document.
Why LTPT Compliance Is Operationally Challenging for Business Clients
LTPT eligibility introduces ongoing administrative requirements that many businesses are not structured to manage consistently.
Accurately tracking part-time employee hours across multiple years can be difficult without dedicated systems, increasing the risk of missed eligibility or delayed plan entry. LTPT compliance also requires timely plan document updates and careful record retention, adding complexity for employers that do not regularly amend retirement plans.
Employee communication presents an additional challenge. Newly eligible part-time employees may be unfamiliar with 401(k) participation and unclear or delayed messaging can lead to confusion at enrollment.
Taken together, these requirements make LTPT compliance less about understanding the rule and more about maintaining reliable processes over time.
The PrestigePEO Advantage
PrestigePEO helps brokers and their clients manage LTPT eligibility with a coordinated, practical approach to compliance and administration.
- Automated hour tracking: Systems support accurate tracking of part-time employee hours, reducing manual effort and error risk.
- 401(k) plan integration: Eligibility, enrollment, and contribution processes align with LTPT requirements.
- Compliance and documentation support: Plan amendments, recordkeeping and audit readiness are coordinated to support regulatory alignment.
- Ongoing advisory support: Brokers and clients stay informed as LTPT guidance evolves, supported by Retirement Specialists available for guidance and support.
Together, these capabilities make it easier for employers to meet SECURE 2.0 LTPT eligibility requirements with confidence.
Next Steps: A Simple Checklist for Brokers
With LTPT eligibility now in effect, brokers can help clients move from awareness to consistent, documented compliance by pairing clear guidance with the right execution support. PrestigePEO enables brokers to do both, providing the systems and expertise needed to manage LTPT requirements with confidence.
Encourage clients to:
- Track part-time employee hours consistently and accurately. PrestigePEO’s time and payroll systems support reliable, ongoing hour tracking, helping employers identify LTPT-eligible employees without relying on manual processes or spreadsheets.
- Review and amend plan documents to reflect LTPT eligibility. Through its retirement plan integrations and compliance coordination, PrestigePEO supports accurate plan amendments and documentation retention, helping brokers ensure clients remain audit-ready.
- Communicate eligibility changes clearly to affected employees. PrestigePEO supports structured enrollment workflows and plan communication, making it easier for employers to explain eligibility changes and encourage participation among newly eligible employees.
- Maintain documentation to support ongoing compliance. PrestigePEO’s systems help employers maintain consistent records related to hour tracking, eligibility determinations, and plan updates, supporting smoother reviews and inquiries.
By partnering with PrestigePEO, brokers can offer clients a coordinated approach to LTPT compliance that brings together hour tracking, retirement plan integration, and ongoing compliance support. This allows brokers to move beyond one-off guidance and help clients manage LTPT requirements with clarity and consistency as guidance evolves.
The Bottom Line on SECURE 2.0 LTPT Eligibility
SECURE 2.0 LTPT eligibility is now an operational reality for employers, and its impact extends well beyond a single plan amendment. Ongoing hour tracking, documentation and employee communication require sustained attention.
Brokers who provide clear, practical guidance on LTPT eligibility can help clients stay compliant while strengthening long-term relationships.
With PrestigePEO as a partner, brokers can offer clients a streamlined approach to LTPT compliance, combining tracking, plan integration, and ongoing support. This allows brokers to focus on advisory conversations while ensuring clients have the structure in place to manage SECURE 2.0 requirements with confidence.
Connect with PrestigePEO to support your clients’ LTPT compliance and reinforce your role as a trusted advisor.
