Like many workers, saving for retirement wasn’t a priority for Mark Zimmerman. The 72-year-old thought he would forever run his family’s dairy farm in Wisconsin, but things didn’t go as planned.
“Farming was hard and we had so many disasters that we couldn’t save any money,” Zimmerman told CNBC from his current employer’s office.
He currently works in a manufacturing industry setting up equipment maintenance and sizing of customized metal parts. Mr. Zimmerman works part-time because it is physically demanding to operate machines while standing on the factory floor.
His employer, Mitchell Metal Products, has fewer than 100 employees and participates in a 401(k) plan for part-time employees.
“I’m really grateful (to be part of the project),” Zimmerman said. “I don’t have a lot of savings right now compared to what I’m going to need, and with the current state of inflation.”
The Merrill, Wis.-based manufacturer offers part-time workers access to the company’s 401(k) retirement plan as a way to attract and retain employees.
“Whether they work full-time or part-time, we view them as our most valuable asset,” said Tim Zimmerman, president of Mitchell Metal Products. 84% of respondents noted that they participate in their company’s retirement plan.
More part-time workers will have 401(k) access in 2024
YORK, S.C. – Currently hiring part-time cooks, a sign is posted outside the Wing King restaurant.
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According to the U.S. Bureau of Labor Statistics, only 66% of private sector workers in the United States have access to their employer’s defined contribution plan. Tax breaks under recent legislation are intended to make it easier for businesses to benefit from them.
This incentive is one of the major changes to the law governing retirement plans under the SECURE Act of 2019 and expanded under SECURE 2.0 late last year. It also includes provisions to expand access to retirement accounts for part-time workers.
The original SAFE Act, starting in 2024, would require employers to extend company retirement plan eligibility to part-time employees who work more than 500 hours a year for three consecutive years. Starting in 2025, Secure 2.0 will reduce the work requirement to two years. Companies are already required to qualify employees who work at least 1,000 hours a year.
Changes in legislation, mandates in some states, and a continued strong job market are causing many small businesses to reevaluate their retirement benefits.
“I think the real value is talking to the plan sponsor,” said Eric O’Donnell, director of product and marketing strategy at Sentry Insurance, which provides retirement plan services to small and micro businesses. Ta.
Making part-time workers eligible for retirement benefits also opens up conversations about savings and investments with newly eligible employees.
Conversations like this remind people that investing in a retirement plan is “for you, something to think about, and it’s not for the wealthy, it’s for the average American.” “It helps us understand things,” he said.
