Most employers maintain 401(k) match

Three out of five employers are electing to maintain 401(k) match despite national recession, according to a survey released by WorldatWork and the American Benefits Council.

According to the survey, more than nine out of 10 U.S. companies offer an employee 401(k) plan. Despite the widely reported drop in account balances, 66% of organizations indicated that at least 70% of eligible employees participated in those 401(k) plans in 2008.

The survey also found that 74% of employers reported no change in the employer matching contribution; 15% have either increased or are considering increasing the employer match; 8% have either decreased or are considering decreasing the 401(k) match, and 3% reported eliminating the match.

“These statistics reflect that employers are clearly committed to providing retirement savings opportunities to their workers, even in tough economic times,” said Cara Welch, public policy director for WorldatWork. “401(k) plans serve a wide range of employers and a wide range of employees. Additional reform should encourage and build on this commitment and avoid creating new obstacles to plan sponsorship.”

But the economy is changing some behaviors. Nearly half (49%) of companies surveyed report that employees are increasingly taking loans from their retirement accounts.

Other survey findings include:
• In 2008, 94% of companies provided some type of employer match to the employee’s individual 401(k) contribution, compared to 93% when the survey was first conducted in 2002.

• The most common employer matching contribution is 3% to 4% of a participant’s pay; the most common employee contribution is 5% to 7% per paycheck.

• 44% of participating organizations offer automatic enrollment in 401(k) plans; 56% do not.