Some employers have ratcheted down or eliminated some matching 401(k) contributions for employees during the latest recession.

Some of these moves, fortunately, may only be temporary at some companies.

Fidelity Investments conducted a client webinar June 4 and discovered that 9.6% of the 302 participating employers reported that they have reduced or suspended the match.

However, according to Fidelity, 55% of those employers have active plans to reinstate the match.

To be sure, many employers have not suspended the 401(k) match that they currently offer.

Overall, the trend isn’t to cut matching contributions, according to Dave Stinnett, head of strategic retirement consulting for Vanguard’s Institutional Investor Group. “They are cutting back on employee benefits only as a last resort,” he said.

Vanguard has been providing more low-cost advice programs, such as its new Digital Advisor product, as part of 401(k) plans. The automated service addresses helping younger consumers and others tackle a variety of financial planning challenges.

Given the expected volatility on Wall Street, many expect that consumers may want some more advice on how to handle their money.

Many times, it makes sense to contribute enough money into your 401(k) plan to capture every matching dollar offered by the company. People tend to save more when there’s an incentive.

And it could make a good deal of sense to continue saving money in your 401(k) plan even without matching contributions. You are still getting a tax break up front for traditional contributions as you are able to set aside part of your pay before federal and state income taxes are withheld.

But if you are dealing with high-cost credit card debt or mounting student loans, you might be better able to use some money you would have set aside for retirement savings toward paying down debt now, if you are no longer getting a company match.

Basic budgeting may require you to make some adjustments, too, if you are facing a pay cut or a furlough.

“If your income is going down at the same time you’re losing your match, you may want to re-evaluate your contribution,” Melissa Joy, a wealth adviser in Dexter, Mich.

In general, though, she says contributing to a 401(k) remains a solid way to save for retirement. “The loss of a match only increases the need for maintaining or growing your personal savings rate,” Joy said.


Susan Tompor is the personal finance columnist for the Detroit Free Press.