Most coverage of the long-term part-time (LTPT) 401(k) rules frames them as a win for young workers juggling shifts. That misses the group with the most to gain: people easing out of full-time work in their late 50s and 60s.
The numbers make the case. Among employed Americans age 65 and older, 38.3% worked part time in 2024, according to the Bureau of Labor Statistics — versus 14.2% of workers ages 55 to 64 and just 11.1% of workers ages 25 to 54. Older Americans are, by a wide margin, the most part-time-concentrated segment of the labor force. SHRM, citing Current Population Survey data, counted roughly 11.87 million employed people age 65 and older as of August 2025, more than double the figure 30 years earlier.
Historically, downshifting to part-time meant falling out of the employer's retirement plan, because most 401(k) plans condition eligibility on 1,000 hours a year.
What the Rule Actually Requires
The original SECURE Act of 2019 required plans to admit employees who worked at least 500 hours in three consecutive 12-month periods. SECURE 2.0 shortened that to two consecutive periods, effective in 2025. An employee must also be at least 21 by the end of the second period — a floor, not a ceiling. There is no upper age limit.
Five hundred hours is roughly 10 hours a week. A consultant working two days a month, a retired nurse picking up weekend shifts, a semi-retired manager on a three-day schedule — all can clear it.
2026 is the year the paperwork catches up. Final 401(k) regulations apply no earlier than plan years beginning on or after January 1, 2026, and plan sponsors face a December 31, 2026 deadline to formally amend documents for the SECURE, SECURE 2.0, and CARES Act changes, per Jenner & Block. Many employers have been complying operationally while their plan documents lag.
The Vesting Quirk Worth Knowing
Here is the provision that rewards a long relationship with one employer. LTPT participants must be credited with a full year of vesting service for any 12-month period in which they work at least 500 hours, counting service from January 1, 2021 — half the usual 1,000-hour standard.
More surprising, the IRS position is that this credit is sticky. As McDermott Will & Emery notes, an employee who enters as an LTPT participant keeps the 500-hour vesting standard even after returning to full-time status and ceasing to be an LTPT employee. Newfront flags that further IRS guidance is still expected here, but as written it can leave two colleagues doing identical work on different vesting schedules — to the former part-timer's advantage.
Where the Rule Stops
Access to deferrals is not access to everything.
- No employer money is guaranteed. Milliman is explicit that employers "are not required to make nonelective or matching contributions to these individuals even if such contributions are made to other eligible employees." That includes safe harbor and top-heavy minimum contributions. The exception: SIMPLE 401(k) plans, where the exclusion does not apply.
- Catch-up and Roth may not be offered. Where the nondiscrimination testing exception applies, a plan offering catch-up and Roth features is not obligated to extend them to LTPT participants — a real cost for a 62-year-old who expected to use catch-up contributions.
- Testing exclusions can be dropped. Plans may exclude LTPT employees from ADP/ACP and top-heavy testing when those employees receive deferrals only. Those exclusions no longer apply once a former LTPT employee works 1,000+ hours in a 12-month period.
Practical Takeaways
Ask HR two specific questions rather than the general "am I eligible": does the plan credit vesting at 500 hours, and are LTPT participants offered match, catch-up, and Roth? The answers vary by plan and drive whether part-time work is worth structuring around the threshold.
If you are near 500 hours and can influence your schedule, the marginal hours are unusually valuable — they buy plan entry and a vesting year at once. And if a match is off the table, an IRA may be the better destination for the same dollars.
Sources: U.S. Bureau of Labor Statistics, Milliman, Newfront, McDermott Will & Emery, Jenner & Block, SHRM