Employer 401K contribution

[chuckw951]

Today my employer announced that they will "suspend" their contribution to employee 401K accounts (3%) effective January 1.

I think the days of employer 401K contributions/matching funds are numbered. Anyone else seeing this cost cutting measure?

[widgeon13]

That is very discouraging because more people will now fore go the contribution and since it might be the only retirement some folks will get further down the road it will hurt them significantly long term.

[Oh Haha]

I've heard rumblings about my company's pension and 401K being frozen. Nothing official as of yet.

[masraum]

Wow, that's crappy.

[Zeke]

As companies falter and mistreat their employees, things will just continue to degrade. This is a shame for what was once a great country. However, as perks become more dear, companies will use them effectively to hire the best. That employment package will become more important as the months/years go by.

I'm thinking companies like Google at the moment. There is so much sub standard service out there anymore I hope most companies cease to exist and are replaced by forward thinking ones. 401's may just be dinosaurs. Find an alternative and while at it, find a decent employer.

[VINMAN]

My company did that with our lower level management employees. Non- management is still safe... for now...

[Rick Lee]

Originally Posted by milt

As companies falter and mistreat their employees, things will just continue to degrade.

How is it mistreating employees to suspend 401k matching, especially when companies are hurting right now? 401k matching is FREE money for employees. No longer getting FREE money from your employer is not what I call being mistreated. If you can find a better deal somewhere else, go work there! I am very happy every day that I don't get laid off. 401k matching is gravy right now.

[Zeke]

Originally Posted by Rick Lee

How is it mistreating employees to suspend 401k matching, especially when companies are hurting right now? 401k matching is FREE money for employees. No longer getting FREE money from your employer is not what I call being mistreated. If you can find a better deal somewhere else, go work there! I am very happy every day that I don't get laid off. 401k matching is gravy right now.

Your opinion, Rick. I think the corporate world has sucked enough on it's workforce.

Sometimes when things get lean they actually get richer.

[Rick Lee]

Originally Posted by milt

Your opinion, Rick. I think the corporate world has sucked enough on it's workforce.

Sometimes when things get lean they actually get richer.

Getting richer is what their shareholders expect them to do. Companies don't get founded as jobs programs. That's what government agencies are for. Why in the world should a company continue handing free money out while teetering on the brink of insolvency? My company laid off some top execs last week and a few sales folks too. They've stopped their education assistance programs and a few other freebies. No one is getting raises in January. I hope they get richer! That means my job is safe. That means people will still buy our stock.

[gassy]

We nixed our match two weeks ago.

[djmcmath]

Wow. We just doubled ours from a 50% match (up to 6% of total paycheck) to a 100% match. Wonder what we're doing wrong?

Dan

[74-911]

Originally Posted by VINMAN

My company did that with our lower level management employees. Non- management is still safe... for now...

From my days of working with our company's 401K, I would think that is rather illegal per 401K non-discrimination rules... maybe some HR types can shed some light on this ? Also, If your lower paid employees aren't contributing, you will become top-heavy rather quickly which will limit the contributions management can make. In smaller companies it is often a constant battle to not become top heavy and the only way to prevent it is to keep the lower paid personnnel contributing.

[widgeon13]

The problem is that companies have done away with defined benefit retirement programs because they decided to redirect some of those retirement funds to the 401k and let the employee do the management instead of having the liability on the company. Now they are doing away with the match. So in some cases they are no longer funding retirement at all.

That is not good for the company or for the individual. If the company has no loyalty to the individual the same is true when the shoe is on the other foot. Employees will leave to find better benefits and that costs the company because they now have to hire and educate. The cost of hiring is much greater than the cost of retention.

It all boils down to short sighted thinking.

RickLee is correct in that companies don't get founded as job programs but a company w/o good employees treated fairly is not a good company.

[legion]

I would hope that the companies that are suspending 401k contributions are doing so because it is the only way to preserve jobs. (Which I would put above retirement contributions.)

In 2002 my employer lost 5 billion dollars. It's kind of a funny story. The executives formulated a plan to grow the company. The lay-people followed the plan to a "T". It was a bad plan. We lost 5 billion dollars. The executives were stripped of their bonuses and the lay-people were still given bonuses and full 401k matches. Imagine that! Now, my employer is not publicly traded (and it's not good press to tell stories like this--doesn't sell copy). The executives went back to the drawing board and came up with a new plan for LONG TERM PROFITABILITY. There were no massive layoffs. The next year we lost 3.5 billion. The year after that we were profitable and have been ever since. We learned from our mistakes and didn't take short-sighted action that crippled the company. I have no doubt that I will get a full 401k match this year. Now next year is a different story...

[widgeon13]

The encouraging thing about the original post is that chuckw951 said it was "suspended", so perhaps if things get better it can be reinstated.

[VINMAN]

Originally Posted by 74-911

From my days of working with our company's 401K, I would think that is rather illegal per 401K non-discrimination rules... maybe some HR types can shed some light on this ? .

I'm not sure how they get away with it. But I work for the biggest phone co. in the country, so i'm sure they had the best advice on how to do it.

[KaptKaos]

401k plans are a huge pain for companies. Sure, they are better than pension plans, but there is a ton of red tape and constant checking to ensure that they don't get top heavy. All of that is at a cost to the company. It's not free. So taking away a match is only a portion of the overall costs of running a 401k that a company pays.

[Dixie]

That is very discouraging because more people will now fore go the contribution and since it might be the only retirement some folks will get further down the road it will hurt them significantly long term.

No worries. The Feds will provide a bailout to all those who did not save. Of course, they'll get the money from those who did.

[widgeon13]

Originally Posted by Capt. Carrera

No worries. The Feds will provide a bailout to all those who did not save. Of course, they'll get the money from those who did.

That is exactly my point.

[Hugh R]

Nothing yet, but we're being told to cut expenses by 35%!!!! At that level, you expect layoffs to follow closely. Assuming I still have a job, I'd contribute regardless of whether or not my employer contributes. I need the write off. Not contributing to a tax deferred savings because your employer won't match? WTF? That would be sort of like saying I'll let my Professional Engineers license expire because my employer won't pay the annual fee.