Will Your Employer Restore Its 401(k) Match?

By Tara Siegel Bernard

In the darker hours of the financial crisis, some employers cut their matching contributions to workers’ 401(k) retirement accounts.

Here’s hoping that 2010 is the year they bring the match back.

According to a recent study by Hewitt Associates, 80 percent of companies that suspended or reduced their company match in 2009 are planning to restore it in 2010. Hewitt, a human resources consulting and outsourcing services company, surveyed 162 mid- to large-size companies, representing 5.7 million employees, at the end of last year.

“While there has been marked growth in 401(k) balances since the market recovery began, we still see too many workers not saving and investing in a way that will help them achieve their retirement goals,” said Pamela Hess, Hewitt’s director of retirement research, in a statement. “Employers are trying to do their part to help — which is why they are restoring their matching contributions and offering features and tools that push workers to save more throughout their working years.”

We want to hold the companies to their word.

So if your employer cut part or all of its match, but hasn’t yet indicated that it plans to restore it, let us know in the comment section below. (Remember, you don’t have to reveal your name or e-mail address when commenting). And let’s not forget to give kudos to those companies that have brought back their matching contributions.

Employers’ matching contributions provide a guaranteed return on your money, which is why you almost always want to save enough to take advantage of the full matching contribution. Most companies that provide matching contributions match up to 3 percent of pay, but they use different formulas to get there. Some companies, for instance, will match you dollar for dollar up to 3 percent of pay, but more companies tend to pay 50 cents for every dollar you contribute, up to 6 percent of your pay.

The Hewitt study also found that employers are continuing to make several other improvements to 401(k) plans. For instance, almost half of employers that do not already offer automatic rebalancing — a tool that would help employees rejigger their portfolios back to their target investment mix — are “very or somewhat likely” to add it to their plan this year. And about 38 percent are very or somewhat likely to add a feature that would allow employees to increase their contributions automatically over time.

Meanwhile, 28 percent of employers said they are very or somewhat likely to add annuities outside of their plan as a rollover option (14 percent offer them now). And more companies indicated that they were likely to add online investment guidance as well as professionally managed accounts.

These are all admirable improvements. But restoring matching contributions would trump them all. What’s your company going to do?

This article "Will Your Employer Restore Its 401(k) Match?" originally appeared at The New York Times.