Attract farmworkers with retirement savings plans

Labor is a huge component of many farms and businesses in the ag supply chain today. In many communities, it may be challenging to attract and retain talented employees. Offering a retirement savings option may be just the solution to help your operation stand out.

What’s best for you and your employees? We sat down with George W. Schein, JD, ChFC, CLU, a financial specialist from Nationwide’s Land As Your Legacy program, to talk about the benefits offered by several savings options.

4 retirement options to recruit and retain top farm employees

1. Simplified Employee Pension (SEP) IRA

Does your operation rely on a small but critical number of employees that work on a permanent, full-time basis? If so, a Simplified Employee Pension (SEP) IRA rewards employees with contributions to retirement accounts that are tax-deductible from your business income. A SEP IRA provides flexibility for you as the business owner to adjust contributions annually, allowing you to react to changes in your farm or agribusiness income. All contributions to a SEP IRA are made by the employer for the benefit of their employees. This makes the SEP IRA a good option for family-run operations, because family-member employees can benefit from the increased retirement savings, while the business benefits from tax deductions.

2. SIMPLE IRA

If you want to encourage your employees to save for their own retirement in addition to making employer contributions on their behalf, a SIMPLE (Savings Incentive Match Plan for Employees) IRA is an alternative solution to a SEP. This option is for small to medium-size farms or agribusinesses (those with 100 or fewer employees). It’s like a SEP because it requires the business owner to make a tax-deductible contribution to the employee’s IRA, but it also allows employees to personally contribute up to $16,500 (2025 limit) each year of their own earnings. This means that a SIMPLE IRA provides tax-advantaged benefits for both the employer and employees.

3. 401(k) defined contribution plan

For larger farms or ag employers, a 401(k) defined contribution plan is a retirement savings solution many employees may expect. In today’s labor market, large employers not offering a defined contribution plan may struggle to attract and retain long-term employees. This savings option permits tax-deductible employee contributions up to $23,500 (2025 limit) and it also allows (but does not require) the business owner to make additional contributions to their employees’ accounts within the plan. Due to the frequent contributions from employees (typically, from every payroll) and to ensure all tax laws are followed, Mr. Schein explains that employers must work with one or more service providers (e.g., third-party administrators, recordkeepers) to administer such plans.

4. Defined benefit plans

Do you own a lucrative farm or agribusiness and wish to save more than what’s allowed by other retirement savings options? A defined benefit plan can be offered in addition to (or in place of) a 401(k) plan. These plans are the most complex, so you will need to hire an experienced service provider to help with all regulatory plan requirements.

Consult with a financial specialist

While the size of your workforce is a major factor in determining which plan is best, Mr. Schein recommends talking to a financial specialist to learn more about your options.

“If you are a farmer or own another type of agribusiness and are considering adopting a retirement plan, there are many options. More than one type of plan might be a good fit for you,” Schein said. “Regardless of which option you choose, it is best to get started now. Retirement readiness is critical for you, your family and your employees.”