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Analysis Shows Most Employers Restore 401(k) Match

The suspensions occurred from January 2008 through January 2010, though most occurred during the first half of 2009, which was the peak of the Great Recession, according to research by Towers Watson.

October 20, 2011
Related Topics: Finance/Taxes, Employee Relations, Corporate Culture, Compensation Design and Communication, Retirement/Pensions, Benefit Design and Communication, Retirement Planning, Benefits, Latest News

Most employers that suspended their 401(k) plan matching contributions during the most recent economic downturn have restored them, according to a new analysis.

Seventy-five percent of employers that suspended their matches have now restored them, according to a Towers Watson & Co. study published last week.

The suspensions occurred from January 2008 through January 2010, though most—83 percent—occurred during the first half of 2009, which was the peak of the Great Recession.


Among employers that reinstated their match, 74 percent restored the match they had in place prior to the suspension. The most frequent match before and after the suspension was one in which employers matched 50 percent of employees' salary deferrals, up to 6 percent of pay, New York-based Towers Watson said.

Additionally, 23 percent of employers that restored their matching contributions did so at a lower rate before the suspension.

Just 3 percent of organizations restored matching contributions at a rate higher than before the suspension.

The median duration of suspension was 12 months.

The analysis is based on 205 organizations of all sizes that suspended their matching contributions.

Big, well-known employers included in the analysis that suspended and later restored matching contributions include Micron Technology Inc., a Boise, Idaho-based semi-conductor manufacturer, which, effective Jan. 1, 2011, after its March 2009 suspension, boosted its matching contribution to 100 percent of employees' deferrals, up to 5 percent of pay from 4 percent of pay; and package delivery giant FedEx Corp. of Memphis, Tennessee, which, effective Jan. 1, 2011, fully restored its matching formula, in which it matches 100 percent of employees' deferrals on the first 1 percent of pay and 50 percent of deferrals on the next 5 percent of pay.

Jerry Geisel writes for Business Insurance, a sister publication of Workforce Management. To comment, email

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