More companies may end 401(k) match

**min0 lee** · 10-28-2008, 09:36 PM

It was a sweet deal when I had it at my last job, this would suck.

More companies may end 401(k) match - USATODAY.com

By Chris Woodyard, USA TODAY
As the economic slump deepens, more companies are expected to join General Motors in suspending matches of contributions to their employees' 401(k) retirement accounts.
GM last week became only the latest on a list of well-known companies trying to conserve cash to weather the downturn by halting 401(k) account matches.

Also among them are Goodyear, Frontier Airlines, commercial real estate firm Cushman & Wakefield, broadcast group Entercom and rental car agency Dollar Thrifty Automotive Group.

Employers typically match a portion of workers' contributions as a way of encouraging them to sock away money for their retirement and as an alternative to funding a pension plan.

Some 2% of 248 employers surveyed this month by human-resources firm Watson Wyatt indicated they have cut back on 401(k) matches as a way of coping with the sinking economy. Another 4% said they may join them in coming months.

Those numbers might be even larger were it not for warnings from experts that cutting back on 401(k) contribution matches can be a morale killer.

"It's penalizing the folks who are doing the right thing (by) contributing to their retirement," says Alec Dike, a senior financial counselor for Watson Wyatt. And the suspensions could backfire on companies because "it suggests you are in worse financial straits than you really are."

But some say the 401(k) system — which has been steadily expanding as pension benefits decline and workers become more responsible for providing for their retirement income — was designed to provide just such flexibility to employers when their business is struggling.

The match is easy to junk because it is essentially a form of profit-sharing by a company, says Jack VanDerhei, research director of the Employee Benefit Research Institute, a Washington think tank.

Frontier, for instance, was kicking in 50 cents for every dollar an employee contributed to his 401(k) up to 10% of his pay, but stopped the matches June 1 after filing for a Chapter 11 bankruptcy reorganization.

For some, it's not the first time. GM's suspension of matches to its 401(k) plan last week for 32,000 eligible white-collar employees was the second time this decade that it has yanked its participation.

"I don't think anybody is happy about it, but people are pretty determined," says GM spokesman Tom Wilkinson.

Goodyear, which halted 401(k) matching in 2003, plans to resume starting Jan. 1.

"We're all excited it's coming back," says spokesman Scott Baughman.

**Big Smoothy** · 10-28-2008, 09:52 PM

The 401K has a lot of problems.

One of which is the hidden fees that the plan administrators are not required by law to tell the worker about.

Over the course of time, these fees serious eat up (steal) a lot of potential returns.

The 401K is a mess. The plans are limited with their "diversification" options, and this can definitely hurt older workers.

Somebody please answer this 401K question for me if they can:

Can you pick up the phone or go online 24/7 and move your funds, say, into cash?

On a related note, the US plan to eliminate pensions began in earnest in 1978 with the ERISA Act.

Very few Americans will ever retire. People will basically work until they cannot physically be able to work any more.

A few who make wise moves financially and plan well, will be able to retire. Going overseas to a country with a lower cost of living is a very important option.

**min0 lee** · 10-29-2008, 02:42 PM

[QUOTE=Big Smoothy;1835304]

Can you pick up the phone or go online 24/7 and move your funds, say, into cash?

Do you mean like taking out a loan?
To take out a loan you have to call during the business hours of 8am to 4pm and they are closed on the weekends.
This was with ING and I had to use one of their reps, is it the same all over....I don't know.

Very few Americans will ever retire. People will basically work until they cannot physically be able to work any more.

I just started but at least I can say I will be able to retire with half of what I make now in 20 years. It's not a million dollars but I won't go hungry. I do some money saved up.

**largepkg** · 10-29-2008, 02:48 PM

Originally Posted by Big Smoothy

Can you pick up the phone or go online 24/7 and move your funds, say, into cash?

You could cash out and take the IRS 10% hit.

I've been able to sell shares and move them to my money market but that's not "cash" as I understood your definition.

This was done during normal business hours with my broker as well.

**Big Smoothy** · 10-29-2008, 10:32 PM

[QUOTE=min0 lee;1835522]

Originally Posted by Big Smoothy

Do you mean like taking out a loan?

No.

Move from equities (funds, stocks) and into cash.

A cash account within the 401K.

I can do with with mutual funds. Call up T. Rowe Price (or do it online) and move funds from the East Asian mutual fund into the T. Row Price cash account (like a bank account).

**Big Smoothy** · 10-29-2008, 10:36 PM

Originally Posted by largepkg

You could cash out and take the IRS 10% hit.

No.

That is a withdrawal. I mean moving into cash within the 401K plan.

I've been able to sell shares and move them to my money market but that's not "cash" as I understood your definition.

Thanks. So you can move into a money market when you want withing the 401K and then move back into funds/equities with a phone call when you want.

Got it. Thanks, mucho.

**I Are Baboon** · 10-30-2008, 07:07 AM

I don't get a 401k match but I am still putting 10% of my check into it. I do get a pension though.

**ZECH** · 10-30-2008, 07:42 AM

Originally Posted by largepkg

You could cash out and take the IRS 10% hit.

That is just the penalty for early withdrawal. Then you have to pay taxes which is about a third. So in all, if you do that, you loose about 40% of what you had.
Believe me, been there, done that because of the ex. I had to withdraw tens of thousands to pay equity in my home.

**I Are Baboon** · 10-30-2008, 08:11 AM

Originally Posted by dg806

That is just the penalty for early withdrawal. Then you have to pay taxes which is about a third. So in all, if you do that, you loose about 40% of what you had.
Believe me, been there, done that because of the ex. I had to withdraw tens of thousands to pay equity in my home.

Yeah, I had to empty my 401k a couple years after finishing college to buy a new car. It sucked. You do what you gotta do I guess.

**Big Smoothy** · 10-30-2008, 01:58 PM

401K is a f*cking sham.

Sham.

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