investing

Employers Cutting 401(k) Matching Contributions

Roughly 12% of employers have suspended matching contributions and an additional 23% are planning to cut their match or are considering it.

The pandemic, which has changed the way millions of people work, is also starting to change the way they save — and not in a good way.

Some 12% of employers have suspended matching contributions to their 401(k) plans, and an additional 23% were planning to cut their match or were considering it, according to a survey conducted in late April by Willis Towers Watson, a human-resources consulting firm. A separate survey by the Plan Sponsor Council of America found that nearly 22% of companies with 1,000 or more employees are suspending or reducing matching contributions to 401(k) plans. Companies in hard-hit industries, such as retail and travel, were more likely to suspend contributions to employees’ retirement plans.

How quickly matches are restored will depend on how fast the economy recovers, but many companies hope the suspension will last only a few months, says Robyn Credico, defined-contribution practice leader for Willis Towers Watson. “I think there’s a lot of belief that by the last quarter of this year or early next year, things will improve,” she says.

Although a company match provides a great incentive to contribute, don’t use the loss of your match as an excuse to stop saving, Credico says. Instead, if you can afford it, try to contribute a little more to make up the difference. With or without a match, she says, “your retirement needs aren’t going to change.”

Most Popular

Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
10 States With the Highest Sales Taxes
Tax Breaks

10 States With the Highest Sales Taxes

Before you embark on a shopping spree in any of the 10 worst states for sales taxes, make extra room in your budget.
June 16, 2021
12 Housing Stocks to Ride the Red-Hot Market
investing

12 Housing Stocks to Ride the Red-Hot Market

The U.S. has a housing shortage and a love affair with home improvement, both of which could create tailwinds for this group of housing stocks.
June 8, 2021

Recommended

14 States That Won't Tax Your Pension
Tax Breaks

14 States That Won't Tax Your Pension

Some states have pension exclusions with limitations based on age and/or income. But these states don't tax pension income at all, no matter how old y…
June 19, 2021
What Fee-Only Financial Advice Really Means – and Why It Matters
Financial Planning

What Fee-Only Financial Advice Really Means – and Why It Matters

You’ve probably heard the term “fee-only financial adviser," but maybe you don’t quite grasp how that works or why it’s far better than the alternativ…
June 19, 2021
10 Least Tax-Friendly States for Retirees
retirement

10 Least Tax-Friendly States for Retirees

When it comes to state and local taxes, retirees in these states are likely to pay more than retirees in other states.
June 17, 2021
33 States with No Estate Taxes or Inheritance Taxes
retirement

33 States with No Estate Taxes or Inheritance Taxes

Even with the federal exemption from death taxes raised, retirees should pay more attention to estate taxes and inheritance taxes levied by states.
June 16, 2021