After the last recession earlier this decade, many employers suspended their 401(k) match and then reinstated it later when the company’s bottom line improved. In fact, in the years following the last recession, employers contributed more to employee 401(k)s than before the recession began, according to Dallas Salisbury, president and CEO of the Employee Benefit Research Institute. But will this recession be different?
For the 401(k) matchless, there is a sign of hope. Many employers have plans to bring back 401(k) matches within a year. Some 48 percent of companies that suspended their retirement account matches plan to reinstate their contributions within 12 months, according to a recent Watson Wyatt survey of human resources executives at 179 U.S. companies. Another 5 percent of employers said they currently have plans to reinstate the watch within 18 months, while 5 percent said it would take even longer than 18 months.
The bad news: About 5 percent of the companies don’t plan to reinstate the match and 35 percent don’t know when they will be able to provide matching funds again. Only 5 percent of the employers surveyed plan to resume contributing to retirement accounts within 6 months.
But just because the match is reinstated, don’t expect to get exactly the same amount. While about 70 percent of companies expect to go back to matching at the same level, 25 percent of employers plan to vary their contribution amount based on company profits. Tell us, would you like your 401(k) match to fluctuate based on your company’s bottom line?
Reader Comments Read all comments (2)
Tom of IL 10:04AM June 29, 2009
franklinwilliams of NY 10:36AM June 28, 2009