Eligibility Essentials:

Clearing Up the Most Common 401(k) Misunderstandings

Determining who’s eligible to participate in a 401(k) plan can get complicated — and even small misunderstandings can lead to big compliance issues. At TriStar, we see these mistakes all the time, from misapplied waiting periods to confusion over part-time eligibility and rehire rules.

That’s why we’ve created this short video series: to help plan sponsors and financial advisors spot common eligibility traps before they cause problems. Each clip breaks down a real-world scenario in under a minute — so you can stay informed, compliant, and confident.

1. Dual requirements

401(k) Eligibility Made Clear: What ‘1 Year and 1,000 Hours’ Really Means

Determining when an employee becomes eligible to join your 401(k) plan can be trickier than it seems—especially when your plan has dual requirements like one year of service and 1,000 hours. Many plan sponsors mistakenly think meeting just one of those benchmarks is enough, but both must be satisfied before an employee can participate. In this short video, we break down what those rules really mean, why it’s easy to get them wrong, and how to make sure your eligibility decisions stay compliant and error-free.

2. Rehires 

Understanding 401(k) Rehire Rules and Eligibility Requirements

401(k) eligibility rules are complex, and even experienced plan sponsors can misinterpret them. This brief video provides a clear overview of key participation requirements, highlights common compliance risks, and offers guidance to ensure your plan meets regulatory standards. A must-watch for advisors and sponsors seeking clarity and confidence.

3. Temps

Don’t Restart the Clock: When Temp Service Counts Toward 401(k) Eligibility

It’s a common misunderstanding — a temporary employee becomes a full-time hire, and the plan sponsor assumes their 401(k) eligibility period starts over. But if your plan has a waiting period and that individual has already logged time as a temp, their eligibility requirements may have already been met. Overlooking that detail can lead to missed deferrals, back contributions, and unnecessary corrections. At TriStar, we help plan sponsors and financial advisors interpret plan documents accurately and apply eligibility rules correctly, so you stay compliant and avoid surprises down the road.

4. Less than a year requirement

The 3-Month Eligibility Myth That Could Trip You Up

A “3-month waiting period” doesn’t always mean employees must work three consecutive months before joining your 401(k) plan. In most cases, eligibility is based on elapsed time, not continuous service. That distinction matters — especially when employees leave and return within the same year. Misunderstanding this rule cause compliance headaches and costly corrections. In this short video, we explain how waiting periods really work and why it’s so important to follow your plan document’s specific language.

5. Part-time employees

Think Your 401(k) Is Just for Full-Time Employees? Think Again.

Many employers assume their 401(k) plan only covers full-time employees—but that’s a common misconception that we see often. In this short video, we explain how eligibility really works, why part-time employees often qualify, and how misunderstanding the rules can lead to expensive plan corrections.

6. Long-term part-time employees

Understanding 401(k) Eligibility for Long-Term Part-Time Employee.

Since the SECURE Acts took effect, 401(k) eligibility rules for part-time employees have become more complex — and more confusing. Many plan sponsors still believe part-timers are excluded if they never hit 1,000 hours in a year, but that’s no longer true.



Now, anyone who works 500 hours or more in two consecutive eligibility computation periods may qualify as a long-term part-time employee and must be allowed to make deferrals.

This short video breaks down what the rule actually says, clears up common misconceptions, and explains why getting it wrong could lead to costly plan corrections.

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