More Evidence of 401(k) Match Comeback

Many large companies plan to resume retirement account contributions

By SHARE

Many companies that cut their 401(k) matches in 2008 and 2009 are planning to bring employer contributions out of retirement. A recent survey of 293 Fidelity 401(k) plans that eliminated or reduced their employer contributions in 2009 found that 44 percent have already reinstated the match or plan to over the next 12 months, up from 27 percent in November 2009.

[See Fewer Workers Enrolled in 401(k)s.]

Large companies were the most likely to resume employer contributions. About 70 percent of companies with 5,000 or more employees have already or plan to resume contributing to employee 401(k) accounts compared to 36 percent of firms with 500 or fewer workers.

[See 401(k) Matches Make a Comeback.]

A suspended 401(k) match certainly decreases an employee’s pay and may also reduce participation in the retirement plan. An average of 63 percent of eligible employees participated in a 401(k) plan when an employer contribution was provided compared to 53 percent at companies without a match, Fidelity found. The most common match rate, which is present in 35 percent of Fidelity 401(k) plans, is $1 for each $1 the employee contributes up to 3 percent of pay. Another popular match that 14 percent of Fidelity plans use is 50 cents for each dollar the worker saves up to 6 percent of pay.