Employer-sponsored retirement plans have long been an excellent tool for employees to save and prepare for a future where they’re no longer required to work. According to the Bureau of Labor Statistics, while 73 percent of civilian workers had access to retirement benefits in 2023, only 49 percent of the lowest quartile of workers (in terms of wages) had access over that same period.
To address this gap, the SECURE Act 2.0, signed into law in December 2022, brought significant changes to retirement savings plans. One of the most impactful changes made toward the increase in employee parity is the expansion of eligibility for part-time workers to participate in employer-sponsored retirement plans in a similar manner to their full-time counterparts.
What Does the Secure Act 2.0 Mean for Part-Time Workers?
Prior to SECURE Act 2.0, many part-time workers were excluded from employer-sponsored retirement plans. This often left a significant portion of the workforce without access to one of the most valuable retirement savings tools and all the resources available through it.
The new law requires employers to allow part-time workers to participate in their retirement plans if they:
- Have worked for the employer for at least three consecutive years, transitioning to two years beginning in 2025
- Have earned at least $500 in each of those three years
This change provides a significant opportunity for part-time workers, including easier access to qualified savings vehicles, plan advisors, investment education, vetted portfolios and much more. By allowing more workers to participate in retirement plans, SECURE Act 2.0 can help bridge the retirement savings gap and improve financial security for millions of Americans.
What’s the Impact on Employers?
Employers will need to update their retirement plans to comply with the new eligibility rules if they haven’t already done so. This may involve:
- Amending your plan documents, including any possible matching provisions. Employers are not required to make employer contributions for long-term part-time employees but are free to do so if they choose.
- Updating your recordkeeping systems to ensure that you’re now tracking all employees. This can be significant for those with a large part-time workforce that went untracked prior.
- Communicating the changes to your employees.
Employers should work with their plan provider and plan advisor to ensure a smooth transition for everyone involved.
SECURE Act 2.0 is a significant step forward in expanding access to retirement savings. By making it easier for part-time workers to participate in employer-sponsored retirement plans, this law can help more Americans achieve their retirement goals through access to the same tools and resources that full-time employees have long enjoyed.
If you have questions about how SECURE Act 2.0 impacts your retirement plan, consider consulting with a financial advisor.
