According to new figures from Fidelity, most companies have chosen to keep their 401 (k) matches despite Coronovirus’s economic downturn, stating that “the company’s matches are not going away.”
Fidelity surveyed 293 of its 22,000 companies and found that 11% reduced or ended their matches. A third (32%) of employers who have done so say they plan to reinstate it in the next year, and about half (48%) say they will do so when they are financially Will be able to form.
Employees must contribute to their 401 (k) plans to provide matching amounts to their employers, and Nishtha noted that despite the economic turmoil, 76% of workers on the Fidelity platform received their matches and 88% had Continued his contribution.
“The company’s match can help provide employees with a savings goal for participation in a workplace savings plan, so we are encouraged to see that most of our clients continue to provide this significant retirement savings benefit,” Kevin Barry, The chairman wrote in a statement, in allegiance to workplace investment.
[Cashay: Here’s what to do if your employer cuts your 401k match]
Several studies have shown that 401 (k) matches are a major driver of retirement savings. A 1: 1 matching of money by the company is effectively 100% return.
According to Profit Sharing / 401 (k) Council of America, during the 2008–2009 recession, about 20% of private sector employers suspended or reduced their 401 (k) matches. The Social Security Administration noted that during that time, the lack of matches could reduce their own contribution amount.
The Center for Retirement Research at Boston College released a list of other companies that have also halted their matches – and some of the leading names on the list are good news for savers with Fidelity.
Atrak, Arconic, Best Buy, LabCorp and Quest (which both process Kovid tests), Lands End, La-Z-Boy, Norwegian cruise line, Re / Max (despite hot house sales). It has affected about 667,790 401 (k). Participants so far, the center noted.
Last week Exxon Mobil (XOM) said it was suspending its 401 (k) match as of October. 1. “ExxonMobil suspending US employee savings plans, effective October 1, 2020, match contribution of the company,” the company is Yahoo Finance. “Currently, the company matches 6 percent minimum employee contribution with 7 percent of the partner’s salary.”
The move came after the company reported its first back-to-back quarterly loss in 36 years. Exxon stated that the suspension of the match was a result of Coronavirus’s influence on his business.
At the same time, a survey by Willis Towers Watson found that most U.S. companies are making it easier for employees to use their 401 (k) plan assets, which would have made adjustments to the plan to allow people to defer debt payments. Is if they have to borrow from their accounts. And while the company said that 12% of employers have suspended (which is upward with Fidelity), 23% are considering or plan to do so later this year.
Ethan wolf-man An author at Yahoo Finance is focusing on consumer issues, personal finance, retail, airlines, and more. Follow her on twitter @ewolffmann.