Title: Get Ready, Part-Time Workers! A Game-Changer in Retirement Account Laws in 2025
Part-time work may offer flexibility, but it often comes with financial challenges, such as lower earnings and fewer retirement savings opportunities. However, a recent law change can make a difference for part-time workers who are saving for retirement.
Simplified Access to Employer Retirement Plans
Thanks to the SECURE 2.0 Act, part-time employees now have an easier time contributing to their employer's 401(k) or 403(b) plans. This change, which took effect in 2025, amends the 500-hour eligibility requirement for part-time workers. Instead of needing three consecutive years of work with at least 500 hours every year, part-time employees now only need to meet the criteria for two consecutive years. Keep in mind that this rule does not apply to collectively bargained plans and does not count service before 2021.
Considerations for Part-Time Workers
The introduction of this new rule can offer some promising advantages, but there are a few things to consider before jumping in:
- Financial Stability: Make sure you can afford to set aside some of your paychecks for retirement. If you are currently battling debt, saving for retirement might not be your top priority.
- Employer's 401(k) Offerings: Evaluate your employer's 401(k) offerings, specifically focusing on the existence of a match and its associated vesting schedule. If your employer does offer a matching contribution, it can be a powerful incentive to contribute a portion of your paychecks to your 401(k). Keep in mind that if you leave the company before you are fully vested in the matching contributions, you may lose some or all of the benefits.
- Ira Options: If you are dissatisfied with the investment options provided by your employer's 401(k), you might want to consider an Individual Retirement Account (Ira). Another benefit of an IRA is its flexibility in terms of investment options and potential lower fees.
Ultimately, the goal is to begin saving for retirement as early as possible. Whether you choose a 401(k), an IRA, or a combination of both, do your research, weigh your options, and make the best decision for your financial future. If you decide to contribute to your employer's 401(k), establish regular transfers to ensure you aren't forgetting to make the contributions come 2025.
[1] New provision in SECURE 2.0 Act expands access to employer-sponsored retirement savings plans for part-time employees[2] SECURE 2.0 Act reduces eligibility threshold for long-term part-time employees to participate in 401(k)s[3] SECURE 2.0 Act can help part-time workers save for retirement[5] SECURE 2.0 Act may change the way employers plan for retirement
With the SECURE 2.0 Act, part-time workers now have simplified access to their employer's retirement plans, making it easier for them to save money for their retirement. Despite the advantages, it's crucial that part-time employees consider their financial stability and thoroughly evaluate their employer's 401(k) offerings to make the most of their retirement savings opportunities.
