QOTW: Contribution Changes

Last week a reporter asked for data on companies suspending 401(k) contributions due to economic conditions. This is not something we had heard from members – in fact we know many companies are looking at increasing contributions and benefits to attract talent. But a google search shows a couple companies announcing match suspensions so we asked members in this week’s QOTW.

One out of 120 respondents (0.8 percent) indicated that they are suspending their discretionary match while 3 companies (2.5 percent) are planning on increases. In fact, several companies indicated in the comments that they have already increased contributions or are making other plan changes to increase the value of benefits to retain employees and attract talent. A similar poll of advisors on this topic by sister org NAPA found the same thing, most advisors are not hearing from clients about decreasing contributions.

Comments follow.

Making changes:

• Increasing the company match and moving to a Safe Harbor Plan
• Suspended discretionary match
• We are actually increasing our employer match
• Yes, although we are contemplating just the opposite as retention has just recently become an issue for our fairly small company (less than 100 employees). We are looking at moving the employer match from 4% currently to as high as 8%. Employees are being extended offers $30-$40k above their current salaries which we are unable to compete with.
   

Not making changes:

• At this time we do not plan on changing our match contributions.
• Company does not offer a match.
• During the 2008-2009 recession we changed our per-pay-period match to an annual Discretionary match.  The decision for the discretionary match is based on the profits of the company during the Plan year.  We expect to have a match for the 2022 Plan year after the close of the year.  Whether there will be a match for 2023 will depend on profits for that year.
• Employer matches are typically used as a recruiting tool as it is a highly desired benefit. Why would an employer remove a valuable tool and benefit that could negative impact their recruiting and retention benefits.
• Given the labor market, there is no desire to decrease this important benefit
• Have no plans to change our match provisions.
• I do not believe our company would do this at any time.
• I do not believe we will reduce the percent of pay profit sharing contribution.  (We don't make any matching contributions.)  We may squeak out another year with a higher actual contribution in the end, because of reduced wages paid out due to vacancies.
• I don't foresee us making any changes next year. We've included the economy in our forecasting.
• Labor market in North Carolina is still tight. Company match on 401k is definitely a plus for employee retention as well as making it as easy as possible to participate.
• May actually increase to help with retention.
• No changes to our plan.
• No talk of any changes or reductions in the coming year, and would be very negative with respect to employee retention and recruitment.
• No there is no plan to change the employer match next year
• No thoughts of doing anything this year.  We will wait to see what next year has in store before deciding.
• no thoughts on doing so next year. no thoughts. no extra hardships or loans, just market downturn and doing more education for employees. We may add managed accounts to help people.
• No, we do our best to ensure no benefits are reduced for employees.
• No, we have not made any change to our match and have no plans to do so.
• Nope-----holding the line and encouraging folks to increase their contributions.  This is a great time for education. Focus on the long-term!!!!
• not likely to happen
• not next year either
• Our company has no plans of changing our match now or in the future. This is a critical benefit to our employees and we would rather make adjustments in other areas than to suspend this benefit.
• Our company realizes that one important factor to retention is the retirement plan and the company match.
• Ours is a multi-employer plan. Some employers provide employees with a match but not all.
• This has not been discussed at all at this time.
• We actually INCREASED our match during COVID.
• We are actually looking at benchmarking to see if we should increase our match for next year.
• We are actually moving our discretionary contribution from annual to being paid per pay period.
• We are not making changes to our matching process.  Any compensation and benefits related changes would likely need to be employee friendly given the level of competition for employees.
• We are not planning to make any changes. We have a pretty generous safe harbor match which we find really helps with the hiring process. We are also committed to helping our team members plan for their retirement - taking away the company match, even partially, would have direct negative impact
• We did suspend the match from Feb to Oct in 2021, but have no plans to reinstate a suspension of the match
• We do not plan to make any changes based on the economy, now or in the future. There will be no suspension of matches.
• We don't plan to make any changes.  I work at a law firm and the partners make their own employer contributions.  Staff members receive a nice match and profit sharing.
• We have a safe harbor plan and do not have a match component.     We have a profit sharing component to 401k and just ended FY22. We believe the company contribution was reduced by about 2% due to supply and labor constraints that more than tripled our backlog and resulted in the inability to meet customer demand (and sales expectations) during the year.
• We have no plans to make changes next year.
• We have no plans to make changes to our match for next year. We feel like the match is the best way to help keep our employees in our 401(k) plan to save for their future retirement.
• We have no plans to suspend our company match.  We always encourage our employees to participate in the plan and when the markets are down, this is an excellent time to build some retirement wealth.  We believe that by not suspending the match, it builds loyalty among our employees; that we are all in this together, during good times and bad.
• We increased our match in 2022 due to the competitiveness of the labor market.
• We only just resumed our match in January, after an 8 year discontinuation.
• We will continue to provide the employer match to our employees.
• Will not be a reduction in the 11% profit sharing contribution provided to participants, in fact we accelerated eligibility for the contribution by 1 year