More Companies Eliminate 401(k) Matches

The battle for a secure retirement is about to get even tougher. Several new surveys of company executives show that they plan to reduce or suspend their company’s retirement-plan contributions this year.  Dozens of employers in the past year have already slashed such costs.  The trend means one important thing for workers: smaller nest eggs, unless they save enough to make up for the missing company contributions and matches.  Arrangements vary, but employers have often matched 25 or 50 cents of every dollar an employee puts in a retirement account, up to 6% of pay.  Companies of all sizes, under financial pressure, are “retrenching on the 401(k) front,” says Alicia Munnell, director of the Center for Retirement Research at Boston College.  General Motors, Eastman Kodak, FedEx, and Sears Holdings are among the companies that have suspended their 401(k) contributions, according to the center.  A survey released Wednesday by research and consulting company Spectrem Group says 29% of employers intend to reduce or eliminate contributions to “defined-contribution retirement plans” in the next 12 months.  Other surveys back up the dire forecast.

Source:  March 26, 2009 Edition of USA Today in the Personal Finance Section