Earlier this year, Greenhouse Grower asked the largest greenhouse operators about their top crop production challenges. Labor shortages emerged as the most significant hurdle, with an overwhelming 81% of respondents citing it as a top concern.
With more than three-quarters of businesses competing for the same need, the labor market has become fiercely competitive. Growers now need to find new ways to stand out from the crowd to attract and retain skilled workers.
Offering competitive benefits packages, including an attractive 401(k) retirement plan, can set your operation apart. When you help your employees plan for — and achieve — their retirement goals, you’re helping show that you’re invested in their future success.
Let’s explore the benefits of offering a retirement plan at your business and review important updates to retirement plans resulting from the SECURE 2.0 Act passed in December 2022. These changes will affect both current and future plans.
Retirement Plan Advantages for Your Employees
When it comes to your retirement plan, educate potential and current employees on the advantages of saving for retirement. Highlight these key advantages:
- There are tools available to help you reach your retirement goals and secure a comfortable future.
- This is an easy, accessible path to save for your future.
- Automatic contributions through payroll deductions reduce your taxable income, saving you money.
- You can save as little or as much as you’d like within limits set by the IRS.
- The benefit of compounding gains: starting earlier means more time for your money to grow.
- Your contributions stay with you, even if you move on to another company.
Investing in a retirement plan not only supports your employees’ financial futures but also strengthens your greenhouse business’s position as a good place to work.
Your Responsibilities as a 401(K) Plan Provider
As a 401(k) provider, you’re responsible for:
- Managing investment options
- Ensuring timely processing of contributions
- Providing participants with essential information to help them make informed decisions
- Acting as a fiduciary to prioritize participants’ best interests
- Staying compliant with regulations
Consult with your plan provider to help fulfill these responsibilities and stay updated on regulatory changes.
Let’s examine one of the latest laws affecting retirement plans — the SECURE 2.0 Act.
SECURE 2.0 Act
The SECURE 2.0 Act, an expansion of the SECURE Act of 2019 and signed into law in late 2022, includes more than 90 changes to U.S. retirement laws and aims to expand enrollment, increase contributions and balances, and make retirement savings easier to access.
Some of these changes took effect immediately, but others will happen over the coming years. While many of the changes are optional, several are mandatory.
Rather than providing an overview of all changes and resulting impacts on retirement plans, here’s a snapshot of key changes in 2024, and what’s ahead for 2025.
Administering retirement plans and meeting their requirements can be complex. Again, I recommend you review these changes with your plan provider.
Key Changes in 2024
Long-Term, Part-Time (LTPT) Employees
Since Jan. 1, 2024, the SECURE Act of 2019 has required employers to allow LTPT employees to make 401(k) contributions. This applies to employees who have worked at least 500 hours in three consecutive 12-month periods and also meet your plan’s age and eligibility requirements.
Required Minimum Distributions (RMD)
Under SECURE 2.0, Roth accounts in qualified plans no longer require pre-death RMDs, effective for tax years beginning after Dec. 31, 2023. However, the first-year RMD for 2023, which was due by April 1, 2024, still included Roth accounts.
Ownership Attribution
Starting in 2024, community property laws no longer apply when determining ownership of businesses within a controlled group. For example, attributing ownership to a minor child of parents’ separate businesses no longer causes those businesses to be treated as a controlled group.
Student Loans
This voluntary provision is effective for the 2024 plan year. You can match your employees’ qualified loan payments as if they were 401(k) contributions:
- Even safe harbor plans can treat these loan repayments as 401(k) dollars
- Employees must annually certify the amount of qualified student loan repayments that have been made during the plan year
- The plan must match elective deferrals and loan repayments at the same rate
- Match is only available if the employee is eligible to defer
- The same vesting schedule must be used for all matches
What’s Coming in 2025?
Additional LTPT Employee Changes
Starting in 2025, those who work 500 hours in two consecutive 12-month periods must also be allowed to contribute to 401(k) plans.
Auto-Enrollment for New 401(K) Plans
For new 401(k) plans adopted on or after Dec. 29, 2022, auto-enrollment will become mandatory starting on Jan. 1, 2025.
Employers must begin automatically enrolling participants with a default contribution rate between 3–10%. If the initial rate is below 10%, it must increase by 1 percentage point each year until it reaches at least 10%, with a cap at 15%.
This requirement exempts businesses with 10 or fewer employees that have been operating for less than three years. Employees will have at least 90 days to opt-out and can choose to take a distribution of any automatic deferrals made during this period.
Additional Changes to Catch-up Contributions
Participants aged 60–63 will be eligible for higher catch-up contributions starting in 2025. During these years, individuals will be allowed a 50% higher contribution limit than other eligible participants (ages 50–59 and 64+). In the year the participant turns age 64, they revert to the standard catch-up contribution limit.
Work With Your Plan Provider
SECURE 2.0 requires you to continually monitor and adjust your retirement plans — and keep your employees informed. I’ve shared several updates in this article, but it’s always best to work with your provider to ensure you remain compliant. They also likely have a number of tools to guide you and your participants.
