Workers Take a Hit From Employersâ€™ Scaled-Back 401(k) Plans
A quarter of U.S. employers arenâ€™t able to keep up with the expense of matching employeesâ€™ 401(k) contributions, according to the results of a new Charles Schwab survey (â€śEmployers Cutting Back 401(k) Plans, Study Shows,â€ť Reuters, June 22, 2009).
401(k) plans allow workers to defer taxes on part of their income and invest that money in stock and bond mutual funds. Large companies like the ones surveyed by Charles Schwab, ranging in revenues from $100 million to more than $10 million, often match employeesâ€™ 401(k) investment contributions.
The constricted economy, however, has forced 23 percent of companies to stop offering 401(k) match opportunities, although many of the companies say this move will be temporary.
â€śThey donâ€™t see that as a long-term approach,â€ť said Steve Anderson, head of Retirement Plan Services at Charles Schwab.
Workers with 401(k) plans, whose savings have taken a huge hit recently, typically pay close attention to their companyâ€™s matching program. In fact, 87 percent of employees polled identified 401(k) match as the most important feature of their companyâ€™s 401(k) plan. The second most important feature was access to advice on 401(k) investing.
The online survey also found that a quarter of companies are no longer offering open enrollment for 401(k) savings plans, limiting enrollment to certain employees.
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