An Improving Economy and Competitive Fears Reignite 401(K) Matches

Summary

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With the economy showing signs of improvement, some of the employers that had cut their 401(k) matching contributions have begun restoring them. Although the total number of companies that eliminated the match was relatively small, it included many high-profile firms in the automotive, energy, financial, high-tech and media sectors. Employers often perceive their match as a profit-sharing mechanism that can justifiably be reduced or eliminated in difficult times, say observers. And employees, while not pleased with the cuts, generally regarded them as preferable to certain alternatives, such as layoffs. Nevertheless, companies generally cut their matches reluctantly and have been happy to restore them, they say. Observers differ about how employers are likely to treat their 401(k) matches over the next few years. Michal Weddell, of Watson Wyatt, says that companies are likely to reintroduce matches gradually. Changes in some employers' approach to retirement benefits also could play a role.

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An Improving Economy and Competitive Fears Reignite 401(K) Matches

WITH THE ECONOMY showing signs of improvement, some of the employers that had cut their 401(k) matching contributions have begun restoring them. Although the total number of companies that eliminated the match was relatively small, it included many high-profile firms in the automotive, energy, financial, high-tech and media sectors.

Employers often perceive their match as a profit-sharing mechanism that can justifiably be reduced or eliminated in difficult...

See the full content of this document

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