While many companies offer a 401(k) plan or similar retirement programs to full-time employees, they extend these benefits to part-time workers at lower rates, research shows.
In fact, only 51% of part-time employees are offered workplace retirement plans by their employers, compared to 77% of full-time workers, according to a report from the Transamerica Center for Retirement Studies.
But that may change with the Secure 2.0 Act signed into law at the end of 2022.
Starting in 2025, part-time employees who have worked for two consecutive years and completed at least 500 hours of service each year will be eligible to enroll in their company’s 401(k) or 403(b) plans.
An official summary of the Secure 2.0 Act states that pre-2021 service is “disregarded for purposes of eligibility under current law.”
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ACT SAFE 2.0 Goals for Retirement Savings Adjustment: What It Means for You
Secure 2.0 to make 401(k) automatic filing a requirement
Although 69% of workers in private industry have access to workplace retirement benefits, only 52% have taken part in such offers, according to the latest data from the Department of Labor.
But starting in 2025, the Secure 2.0 Act will require companies with new 401(k) and 403(b) plans to automatically enroll workers in those plans at minimum contribution rates ranging from 3% to 10%. Rates will increase by 1% each year to 15% and employees can choose to opt out of these plans.
De Sauer, president of Retirement Plan Services and American Brokers at T.V. “At a time when individuals and businesses face competing financial pressures, we are pleased to see legislation that enhances retirement savings opportunities for millions of Americans.”
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Act Safe 2.0: Americans will be able to make tax-free transfers of 529 plan funds to ROTH IRAS
Summarizing Secure 2.0
The Secure 2.0 Act, a follow-up to the Secure Act of 2019, is legislation intended to reshape the retirement plan landscape with more than 90 changes to retirement account laws and administration. Here are some highlights.
- Starting in 2025, workers ages 60 to 63 will have the option to make special compensation contributions of up to $10,000 to workplace retirement plans such as 401(k)s.
- The required minimum age for distribution (RMD) will rise to 73 this year and then to 75 in 2033.
- Starting in 2024, employers can provide their employees with 401(k) contribution matches based on the workers’ student loan payments.
- Starting in 2024, plan sponsors can create “emergency savings accounts” that allow employees to make after-tax Roth contributions to special savings accounts within their retirement plans.
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