401(k) early casualty of downturn (recession would jeopardize employers match - 3% is COOL!)

Journal Gazette ^ | 11/09/08 | DAVID PITT

[Libloather]

401(k) early casualty of downturn
Recession would jeopardize match made by employers
DAVID PITT Associated Press
Published: November 9, 2008 6:00 a.m.

DES MOINES, Iowa – Retirement accounts already battered by a steep market decline might get hit again as several companies suspend or reduce their 401(k) match to save cash.

**SNIP**

Matching contributions average about 11 percent of a company’s profits, according to a recent survey of more than 1,000 companies by the Profit Sharing/401k Council of America.

**SNIP**

“This is a recession-type of response. These employers are really up against it and they have to decide to cut somewhere and this seems like the least bad place for them to cut,” said Alicia H. Munnell, director of the Center for Retirement Research at Boston College.

**SNIP**

Jamie Bloomquist, 40, works for Maine Boats, Homes & Harbors, Inc., of Camden, Maine. Even with just eight full-time employees, he enjoys a 3 percent match on his account.

“It seems to me that would not be the best place to start cutting because it does say something about their commitment to their workforce and their commitment to you as an employee,” he said.

For workers who lose the company match, it’s essentially a pay cut, said Tom Stritikus, 38, of Seattle, who gets a match of 7.5 percent from his employer.

“People get enraged (when) they don’t get cost-of-living adjustment for one or two years,” said Stritikus, an associate dean at the University of Washington. “But to think about taking an actual cut to your salary is quite a daunting proposition.”

**SNIP**

Schwab, which manages company-sponsored retirement plans covering 1.3 million workers, said it hasn’t heard of any clients planning to suspend or reduce their match in the current climate.

[Libloather]

RATS are on the march. Be very aware.

Do not lose your behind just because of an election...

[pillut48]

Anyone know of any good mattress sales going on right about now????

/sarc

[Libloather]

Anyone know of any good mattress sales going on right about now????

I still have mine. Care to add to the pile?

[MarkL]

I worked for a company some years ago that got rid of their matching. They also reimbursed service employees less than what the IRS would allow for mileage. Eventually they cut out all reimbursement for mileage. From what I heard, when a salesman takes a client out for lunch, the company only picks up the tab for the client, not the salesman. They also expect everyone still working there to supply their own coffee and office supplies. And they wonder why they can't keep anybody good there...

Mark

[CapnJack]

There will have to be decisions made as to weather employees are cut or the 401K contributions will be cut.

If companies cut employees, lets hope they are Obama voters.

[RochesterFan]

Let’s be careful of jumping to conclusions. As revenue plummets, corporations are worried about getting business done and meeting payroll. Access to cash is very difficult in this environment. The goal is to survive this downturn with your core business in tact. The harsh reality is that difficult choices will have to be made. If cuts in employee 401k matching funds are coupled with cuts in executive bonuses and other perks, then we may rightly conclude that all the cuts were necessary for survival.

[An Old Man]

"If companies cut employees, lets hope they are Obama voters."

This is a test:

Assume you are in charge of maximizing the companies short term profits choose from the following responses;

1. Would you lay off the high paid skilled workers knowing that with fewer workers payroll costs would be reduced?

2. Would you retain the services of the lower paid workers knowing that payroll would be reduced, thus allowing you to increase production by hiring more low paid workers if needed?

[an amused spectator]

What does your “3% is cool” comment mean?

[longtermmemmory]

The Democrat Party is proposing the federal governmetn TAKE ALL the 401(k) retirement accounts and in return guarantee a mere 3% return.

IOW DE-privatize retirement accounts.

ONLY the government allowed to provide retirement accounts.

The largest power grabe of private property.

Essentially this is doing to 401k accounts what unions did to pension funds.

[an amused spectator]

I get it. This Ossociated Press article is a propaganda piece scaring you about losing your matching, so when the Donks rape your 401K, most people will be cool with it.

We don't even really need to post the articles themselves anymore - just a link, and we can go on to write an editorial about the REAL purpose of the New Government Media article.

I did one earlier today:

Todd Lewan (AP): Historians, Too, Call Obama Victory 'Monumental'