Blog Layout

Automatic Enrollment for Long-Term Part-Time Employees under Secure 2.0

Jennifer Risi • December 11, 2024

For most Americans, the primary source of retirement savings comes through workplace plans. Despite perceptions that others may save through brokerage accounts or insurance policies, statistics show workplace plans are the cornerstone of retirement security. Individuals are 15 times more likely to open and fund a 401(k) at work than to set up an IRA independently, with over 56% of American workers participating in a workplace retirement plan.[1] These plans provide a clear path toward financial stability in retirement and reduce reliance on Social Security alone.   

Automatic Enrollment: A Proven Success   

 

Automatic enrollment has been an innovation in boosting participation in workplace retirement plans: Employers automatically enroll newly-hired, eligible employees into the company's retirement savings plan, which removes the need for employees to take any action on their own. When they’re required to proactively opt in, only about 40% participate; with auto-enrollment, that jumps to around 85%.[2]   

 

How Automatic Enrollment Works   

 

Employers implementing automatic enrollment can set initial contribution rates to between 3% and 10% of an employee's salary. Contributions automatically increase by 1% annually until they reach a range of 10% to 15%, with the exact rate set by each employer. Employees can opt out or adjust their contribution levels at any time; most choose to remain enrolled, and therefore benefit from consistent savings and compounded growth.   

 

 

Expanding Access to Long-Term Part-Time Employees   

 

Historically, many retirement plans excluded those employees working fewer than 1,000 hours annually. This left long-term part-time workers without access to workplace savings opportunities. Congress addressed this issue in the SECURE Act of 2019, requiring employers to allow employees who work at least 500 hours annually for three consecutive years to participate in retirement plans.   

 

The SECURE 2.0 Act further improved this by reducing the eligibility period to two consecutive years. Starting in 2025, employees who meet this threshold will be automatically enrolled in their workplace plan. 

 

It should be noted that employers are not required to make matching contributions or include these employees in certain compliance tests, making the change more manageable for businesses.   

 

 

The Importance of Retirement Savings   

 

Expanding access to workplace retirement plans, particularly for long-term part-time employees, is essential to improving financial security for all workers. Automatic enrollment has proven effective in increasing participation and helping employees build meaningful savings.   

 

As Stephen Dobrow, President of Primark Benefits said, "In all my years of encouraging people to save for retirement, no one has ever said, ‘I saved too much.’ Expanding access to workplace plans ensures more individuals have the opportunity to save and secure their financial futures."   

 

With Secure and Secure 2.0, long-time part-time employees will now have a greater opportunity to prepare for retirement.   


[1] https://pensionrights.org/resource/how-many-american-workers-participate-in-workplace-retirement-plans/#:~:text=Annual%20figures%20from%20the%20Bureau,%2Dtime%2C%20was%2056%20percent.

[2] https://www.asppa-net.org/news/2023/10/power-auto-enrollment-and-auto-escalation-numbers-asppa-annual/

Understanding ROTH Retirement Accounts: The Hidden Risks

March 19, 2025
The ROTH Retirement Account, named for Senator William Roth, was introduced as part of the Taxpayer Relief Act of 1997. The main feature of a ROTH account is that contributions are made with post-tax dollars as opposed to pre-tax; this means that any withdrawals, including earnings on the investments, are tax-free in retirement. This advantage can be particularly attractive for those individuals who anticipate being in a higher tax bracket later in life. However, this needs to be weighed against the uncertainty about whether and for how long this tax status will be truly protected. Can you safely invest in a ROTH account and really expect tax-free withdrawals ten, twenty, or thirty years down the line?

Best Practices for Retention of Retirement Plan Records

March 5, 2025
How Long Do I Need to Keep All of This Paperwork? Today, we’re going to share our position on what may seem to be a black-and-white (if not also mundane) retirement plan-related topic - that of record retention. It’s one that we’ve been asked about hundreds of times, and understandably so: For one thing, it involves a lot of files, whether hard copy or electronic. Also, the requirements and guidelines from various government agencies can often seem to conflict. Most importantly, though, it has gotten plenty of well-meaning plan sponsors into some hot water, both financially and legally. There have been numerous instances when it turned out the guidelines weren’t enough to protect employers from costly legal disputes. Read on to find out more. 

Super Catch-Up Contributions under Secure 2.0: Enhanced Retirement Savings Opportunities

By Jennifer Risi • February 18, 2025
Primark Benefits is continually monitoring legislative updates. As such, we are sharing this reminder about the “super catch-up" contributions available under The SECURE 2.0 Act, in effect as of the start of 2025.
More Posts
Share by: