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(Forbes)   IBM changes 401(k) plan to pay the employee match as a lump sum on December 31st. Unless the employee is laid off before that date, in which case they get nothing and IBM pockets the loot   (forbes.com) divider line 87
    More: Stupid, December 31st, IBM, lump sums  
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2138 clicks; posted to Business » on 10 Dec 2012 at 11:44 AM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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ZAZ [TotalFark]
2012-12-10 11:17:01 AM
Pension amounts were frozen in place, with all future benefits coming in the form of a cash credit.

In more familiar terms, IBM changed a defined-benefit plan to a defined-contribution plan, as many employers have done and the rest want to do.

Some big companies give annual benefits instead of biweekly benefits to encourage employees to think of their jobs as a career. If you plan to work 20 years you don't care if you get a bonus every Christmas instead of every month.
 
2012-12-10 11:33:11 AM
According to the Wall Street Journal, IBM payed out $875 million in employee 401(k) contributions in 2011, a number that will likely decrease as a result of the planned change in 2013.

I think we can all learn a lesson from this. And the lesson is that Forbes can't spell 'paid'.
 
2012-12-10 11:51:59 AM
Gotta get that guap!
 
2012-12-10 11:53:46 AM
Coming soon to EVERY EMPLOYER EVER.

// but if you don't like it, you're free to find an employer that does have a pension plan, is employee-owned, lets you build your 401(k) throughout the year*, gives you a month of vacation days, has a health plan...
*and employees just lose out on the interest that they'd have earned in a year?
 
2012-12-10 11:55:58 AM
IBM is aslo looking into making changes to the 401(k) plan to pay the employee match as a lump sum on the 20th year of employment.
 
2012-12-10 11:56:02 AM

Linoleum_Blownapart: According to the Wall Street Journal, IBM payed out $875 million in employee 401(k) contributions in 2011, a number that will likely decrease as a result of the planned change in 2013.

I think we can all learn a lesson from this. And the lesson is that Forbes can't spell 'paid'.


payed past participle, past tense of pay (Verb)
Verb

Give (someone) money that is due for work done, goods received, or a debt incurred.
Seal (the deck or hull seams of a wooden ship) with pitch or tar to prevent leakage.


Link
 
2012-12-10 11:58:16 AM
These companies are going to keep pushing the limit until "cash in hand at the end of the day" is the only thing that will matter.

They will, of course, scream "look at those union farker that actually get to retire - go be pissed about that!" Just like they have every single time they've taken something away.
 
2012-12-10 12:00:31 PM
Many years ago at my company they went from a monthly 401(k) match to an annual match. They upped the percentage they matched by 5% but if you termed before the match processed you were SOL and looking at everything in the market at that time, the gains over the year were more than that extra 5% so you were screwed regardless.
 
2012-12-10 12:01:37 PM
This is crap.

I understand defined benefit & contribution plans. They didn't make that change.

This is an attempt to save money for the company. It isn't a benefit in ANY way for the employees.

ZAZ: Pension amounts were frozen in place, with all future benefits coming in the form of a cash credit.

In more familiar terms, IBM changed a defined-benefit plan to a defined-contribution plan, as many employers have done and the rest want to do.

Some big companies give annual benefits instead of biweekly benefits to encourage employees to think of their jobs as a career. If you plan to work 20 years you don't care if you get a bonus every Christmas instead of every month.

 
2012-12-10 12:07:54 PM

BizarreMan: ...and looking at everything in the market at that time, the gains over the year were more than that extra 5% so you were screwed regardless.


This is a big part of what would steam me. Not only is it a way to scam employees out of their match, but even if you do get the match the company gets to keep your money invested and earning for them when it should be working for you.
 
2012-12-10 12:09:19 PM
So they get to keep it and earn interest on that money for a year while I don't? yea, that sounds awesome.
 
2012-12-10 12:11:42 PM

Fish in a Barrel: BizarreMan: ...and looking at everything in the market at that time, the gains over the year were more than that extra 5% so you were screwed regardless.

This is a big part of what would steam me. Not only is it a way to scam employees out of their match, but even if you do get the match the company gets to keep your money invested and earning for them when it should be working for you.


The fun part was sitting in the meetings with Corp HR/Benefits where they are praising the new, impressive and awesome plan. Except anybody who was actually in the plan already and could do a modicum of math in regards to their account knew it was total BS.
 
2012-12-10 12:15:35 PM
As a former IBMer, this is really normal stuff. It is difficult to run a tech corp where you have employees who have worked for you for decades with prime benefits who refuse to reduce any of them to keep the company profitable and still compete against other tech companies whose employees are the age of your employees grown children and are willing to take a quarter of the benefits because they've never known any different. This particular change seems relatively minor compared to the benefit fights they have had over unionization efforts in the past. It was absolutely one of the best work places I've ever experienced, but whether they can maintain jobs in the U.S. at all is becoming sketchier by the year.
 
2012-12-10 12:19:52 PM
My company does this, although the annual payout is mid-February. It makes for a large disincentive to leave once you get close to February, the bastards.
 
2012-12-10 12:22:21 PM
As a current IBMer, I'm getting a kick out of these comments.

Though I have to say, I was quite disturbed when I heard this news last week. Just another way for them to increase profit, not caring about the people that make it for them.
 
2012-12-10 12:26:55 PM

1000 Ways to Dye: Linoleum_Blownapart: According to the Wall Street Journal, IBM payed out $875 million in employee 401(k) contributions in 2011, a number that will likely decrease as a result of the planned change in 2013.

I think we can all learn a lesson from this. And the lesson is that Forbes can't spell 'paid'.

payed past participle, past tense of pay (Verb)
Verb

Give (someone) money that is due for work done, goods received, or a debt incurred.
Seal (the deck or hull seams of a wooden ship) with pitch or tar to prevent leakage.


Link


http://www.grammarphobia.com/blog/2011/04/paid-payed.html

There's only one common sense in which either "payed" or "paid" can be used, according to the lexicographers at American Heritage and Merriam-Webster's.

This is when the verb "pay" means to slacken something like a line or rope, allowing it to run out a little at a time. Example: "He payed out the rope to give it some slack."


Aint can also be found in dictionaries.
 
2012-12-10 12:28:42 PM

Linoleum_Blownapart: 1000 Ways to Dye: Linoleum_Blownapart: According to the Wall Street Journal, IBM payed out $875 million in employee 401(k) contributions in 2011, a number that will likely decrease as a result of the planned change in 2013.

I think we can all learn a lesson from this. And the lesson is that Forbes can't spell 'paid'.

payed past participle, past tense of pay (Verb)
Verb

Give (someone) money that is due for work done, goods received, or a debt incurred.
Seal (the deck or hull seams of a wooden ship) with pitch or tar to prevent leakage.


Link

http://www.grammarphobia.com/blog/2011/04/paid-payed.html

There's only one common sense in which either "payed" or "paid" can be used, according to the lexicographers at American Heritage and Merriam-Webster's.

This is when the verb "pay" means to slacken something like a line or rope, allowing it to run out a little at a time. Example: "He payed out the rope to give it some slack."

Aint can also be found in dictionaries.


... and since IBM was slowly dispensing funds, running it out a little at a time, that usage of payed fits their sentence.

I give! I stand corrected.
 
2012-12-10 12:31:54 PM
Well it will make it that much easier for Google, Apple, etc to hire away talent. I'd find a new job if my employer did that. That's money that could be working for me for months sitting in their interest bearing account, fark that.
 
2012-12-10 12:39:39 PM
According to the Wall Street Journal, IBM payed out $875 million in employee 401(k) contributions in 2011, a number that will likely decrease as a result of the planned change in 2013.

let's see what the numbers are BEFORE you get all torches and pitchforks
 
2012-12-10 12:41:07 PM

hp6sa: My company does this, although the annual payout is mid-February. It makes for a large disincentive to leave once you get close to February, the bastards.


By design. A lot of people look for jobs over the winter holidays and resign in Jan/Feb
 
2012-12-10 12:52:07 PM

ZAZ: Some big companies give annual benefits instead of biweekly benefits to encourage employees to think of their jobs as a career. If you plan to work 20 years you don't care if you get a bonus every Christmas instead of every month.


Except a 401(k) match is not a "bonus" but a benefit that typically applies every paycheck. Unless they balanced this move out by, say, increasing the allowable match or something, I don't see how this is anything but a blatant benefit reduction. With high-tech companies (with actual great benefits) hiring like crazy these days, this seems like a pretty stupid move.
 
2012-12-10 12:54:32 PM

ZAZ: In more familiar terms, IBM changed a defined-benefit plan to a defined-contribution plan, as many employers have done and the rest want to do.


That's not what happened and I have no idea why you're saying it. I also have no idea what motivation you had for cutting the bit of the quote where it says the pension plan was frozen thirteen years ago.

This change is one thing and one thing only: the contributions started in 1999 will no longer be paid out with the pay cycles and will be paid instead as a lump sum in mid-December. This has absolutely no benefits for the employees at all and, in fact, can potentially harm them greatly by virtually forcing them to invest the entirety of their contribution at the end of the year regardless of current market performance. Not to mention the fact that you could work for the company for 348 of the 365 days in the year and potentially get nothing simply because they laid you off the day before the disbursement. It also punishes people severely for changing jobs late in the year.

In the meantime, IBM gets to sit on and invest that cash throughout the year reaping the benefits that would have otherwise gone to the employees' retirement plans.

Unless this article is missing some massive amounts of information you would have to be an intensely stupid person to suggest this move is anything but bad news for non-executive IBM employees. 

This is another giant F U to American workers. First wealthy shiatbirds stole all the pension plans so they could give wealthy investors and executives bigger payouts and told everybody they would give them a 401k and matching contributions and make retirement planning the employee's responsibility. Now they're actively assaulting 401k contributions because no matter how much some people have it's just never enough.
 
2012-12-10 01:01:55 PM

ko_kyi: hp6sa: My company does this, although the annual payout is mid-February. It makes for a large disincentive to leave once you get close to February, the bastards.

By design. A lot of people look for jobs over the winter holidays and resign in Jan/Feb


Oh yeah, and everyone here knows it. The turnover is pretty low, which is good (lower hiring costs) and bad (stagnation as no one moves, leaves, or gets promoted).
 
2012-12-10 01:02:24 PM
Am I read this part right?

FTFA First, any employee who leaves IBM's employment prior to December 15 for any reason other than a formal retirement will not receive any company match to his or her own 401(k) contributions for the entire year.

So, if I quit/am fired, they take the money that came from my paycheck that was supposed to be going towards my retirement?
 
2012-12-10 01:03:35 PM
By doing this, for one, IBM finally catches up with my former employer, a tiny little HMO in the Midwest with fewer than 150 employees. WTF took so long, Big Blue?
 
2012-12-10 01:06:29 PM

syphaxe: So, if I quit/am fired, they take the money that came from my paycheck that was supposed to be going towards my retirement?


No. That is one of the few things about a DC plan that is completely and totally illegal. Your money is your money. They can't forfeit YOUR money. They can only forfeit THEIR money (aka, matching funds).
 
2012-12-10 01:10:26 PM

pmmal:

No. That is one of the few things about a DC plan that is completely and totally illegal. Your money is your money. They can't forfeit YOUR money. They can only forfeit THEIR money (aka, matching funds).


I don't think it will be very long for that to change, unfortunately. It will soon be considered a "donation" to the company for the privilege of working there.
 
2012-12-10 01:19:53 PM

syphaxe: Am I read this part right?

FTFA First, any employee who leaves IBM's employment prior to December 15 for any reason other than a formal retirement will not receive any company match to his or her own 401(k) contributions for the entire year.

So, if I quit/am fired, they take the money that came from my paycheck that was supposed to be going towards my retirement?


You are correct. My money is on IBM having a massive resource allocation (their retarded euphemism for layoffs) in the second half of 2013 then in 2014. Their goal is to reduce their US workforce to around 25% of their 2010 level. So if you are laid-off on Dec 14, you are farked. As a former IBMer (involuntarily--our small software company was purchased then half of us were RA'd within two years of the acquisition) I found out how shiatty that company was to work for. They suck.
 
2012-12-10 01:23:10 PM

misantropo: syphaxe:

So, if I quit/am fired, they take the money that came from my paycheck that was supposed to be going towards my retirement?


I should have stressed that it is their matching contributions you are farked out of not your paycheck...I need to RTFC more closely...
 
2012-12-10 01:25:18 PM

ZAZ: If you plan to work 20 years you don't care if you get a bonus every Christmas instead of every month.


Perhaps if you're retarded and think 401k contributions are bonuses. Nobody else would be happy with that.
 
2012-12-10 01:28:24 PM
Just as I argue with health insurance, GET EMPLOYERS OUT OF THE LOOP. Seriously, the whole thing is arcane. Absurd. 19th Century. Pants-on-head loopy.

If you're worried about future cap-gains tax increases, and that's the reason to support 401ks? Let's just raise the IRA/Roth-IRA limit to $15k/year or so.

Make it a nice, simple, here's your farking salary, this is what you get paid. End of story. Directly comparable with every other place out there.

Honestly, I'd even argue for eliminating the 'paid holiday'. Leave some sick days (there are good reasons to encourage people to stay home). Negotiate the number of unpaid holidays you're allowed to take or accumulate the right to. But, 'paid'? Bah.
 
2012-12-10 01:31:37 PM

HotWingConspiracy: ZAZ: If you plan to work 20 years you don't care if you get a bonus every Christmas instead of every month.

Perhaps if you're retarded and think 401k contributions are bonuses. Nobody else would be happy with that.


Not that this is a bonus, but there are a growing number of companies that don't match. Sadly, to even get a match of a few percent at the end of the year could make some people happier.
 
2012-12-10 01:32:40 PM
Now I'm glad that I turned down a job at IBM.
 
2012-12-10 01:37:50 PM
Wasn't 401k's supposed to be some great market based version of pensions? Guess that's another Fail for capitalism.

Hypnozombie
 
2012-12-10 01:37:55 PM

Lawnchair: Just as I argue with health insurance, GET EMPLOYERS OUT OF THE LOOP. Seriously, the whole thing is arcane. Absurd. 19th Century. Pants-on-head loopy.

If you're worried about future cap-gains tax increases, and that's the reason to support 401ks? Let's just raise the IRA/Roth-IRA limit to $15k/year or so.

Make it a nice, simple, here's your farking salary, this is what you get paid. End of story. Directly comparable with every other place out there.

Honestly, I'd even argue for eliminating the 'paid holiday'. Leave some sick days (there are good reasons to encourage people to stay home). Negotiate the number of unpaid holidays you're allowed to take or accumulate the right to. But, 'paid'? Bah.


I now work for a company that uses PTO (paid time off), meaning they don't use specific holidays as paid time off, however I can get paid by using the built up hours when I want. At my company it is the same as Holiday+Sick Days+Vacation Days added together so I haven't lost any paid time off, but when it is bundled together it affects their accounting in some mysterious way. (Of course it benefits the company in some way in the end.)
 
2012-12-10 01:48:05 PM
Wow, fark IBM. I work for a nonprofit and we still pay our employee matches every 2 weeks with payroll.
 
2012-12-10 01:55:21 PM
My company replaced the 3% 401K matching with a profit sharing program. If we beat our profit goal by 5%, we get 1% put into our 401K. 6% gets us 1.2%, 7% gets us 1.4%, on up to a max of 4% deposited for beating the goal by 20%. If we don't hit the 5% over goal target, we get nothing. (Yes - the company hitting its goal on the nose gets us nothing.)

They made sure to emphasize the fact that we could get up to 4%, which is more than 3!!!

Never mind that it comes in a lump sum (like this), instead of paid out over the year to get the market benefit. Or that even in our best year over the past 10, we would have only gotten 3.2%. Or that in 4 of the past 10, we would have got nothing, with the other 5 running between 1 and 2%. Or that they don't communicate what the goal number is until after the year is done and the calculations are set in stone.

Because 4>3, we should be happy with the change.
 
2012-12-10 02:00:25 PM
I worked for a company that did something like this once. The required every one to work nights and weekends, no vacation no holidays, on a big project with the promise of compensation and bonuses at the end of the project. The day after the project was finished the laid off 2/3 of the team and as they were no longer employed they didn't qualify for the bonuses or other compensation.

/Company wonders why they have trouble attracting good help
 
2012-12-10 02:00:50 PM
It is obvious another IBM resource allocation is coming but they come no matter what. Now they will be more cost savings for IBM in addition to moving the positions overseas to lower cost 'geos'.
 
2012-12-10 02:03:10 PM

astroman05: (Yes - the company hitting its goal on the nose gets us nothing.)


Crap like that is why no one is loyal to their company anymore and it will only get worse. Yet they wonder why they can't keep top talent for more than 3-5 years at a time
 
2012-12-10 02:07:56 PM
I used to work for a company that paid a 13th month on the 15th of December. There were certainly clusters of terminations around Thanksgiving.

(They also paid monthly, and you had to be on the payroll at the start of the month to get a check. If you were hired on the 2nd, you woudn't be seeing a check for two months.)
 
2012-12-10 02:16:18 PM
I worked for IBM Global Services (actually when I started it was ISSC or some shiat like that) from 1996 - 2000. They were a kickass organization in '96, but I could see the writing on the wall by the time I quit. I hadn't been there long enough to be grandfathered in on the old retirement plan when they changed in '99 and that was a big factor in leaving. The money was great, though; I still don't make nearly what I made back in '00. Well, I guess many people in IT are in that situation actually.

/Now work for the USPS in IT
//Not great pay, but still great benefits, and we're the only part of the organization that they don't want to make major cuts to. Yet.
///Union FTW, biatches!
 
2012-12-10 02:35:03 PM
They are screwing you out of more than the match, even if you stay with the company. Pay it throughout the year and you can invest it and get it working for you right away. So by the end of the year, you have match and whatever interest that match accrued. Lump d et end of year, and you only have the match
 
2012-12-10 02:40:25 PM

Pumpernickel bread: They are screwing you out of more than the match, even if you stay with the company. Pay it throughout the year and you can invest it and get it working for you right away. So by the end of the year, you have match and whatever interest that match accrued. Lump d et end of year, and you only have the match


Not to mention it probably vests which means you also have to wait for the entire amount to vest at once or still lose it instead of say, having 75% of it vested when you leave and only losing that last 25%.

The whole thing is clearly designed to completely fark over workers so that IBM can keep the money.
 
2012-12-10 02:53:59 PM

ghall3: astroman05: (Yes - the company hitting its goal on the nose gets us nothing.)

Crap like that is why no one is loyal to their company anymore and it will only get worse. Yet they wonder why they can't keep top talent for more than 3-5 years at a time


I don't think any company wonders about that these days. Their biggest concern is how to squeeze more from their talent in the 3-5 years they have you.
 
2012-12-10 03:03:42 PM

Lawnchair: If you're worried about future cap-gains tax increases, and that's the reason to support 401ks? Let's just raise the IRA/Roth-IRA limit to $15k/year or so.


The income from 401ks and IRAs is taxed as normal income, not capital gains.
 
2012-12-10 03:08:38 PM
wait...there are still companies that pay into employee 401K's???
 
2012-12-10 03:12:53 PM

Devo37: wait...there are still companies that pay into employee 401K's???


I don't know anyone with a 401k that doesn't get a company match.
 
2012-12-10 03:17:54 PM
Im a true blue conservative but even I can see we are heading down a path that leads to destruction. What are we supposed to do in 40 years when nobody has any retirement? Millions upon millions of people are going to be homeless or sick or worse. I have had a 401k for 15 years. I sat down with my investment advisor and added up how much I have made outside of my contributions in 15 years. Guess what the total is? -1300 dollars. The only person that has made money off my money for 15 years is investment advisors. I cant be the only one. 401k arent making anybody money but bankers. What are the rest of us supposed to do?
 
2012-12-10 03:26:23 PM

walkingtall: I sat down with my investment advisor and added up how much I have made outside of my contributions in 15 years. Guess what the total is? -1300 dollars.


How does this happen? I typically make 10-15% per year (2008 and 2009 were obviously exceptions). My balance is roughly 5 times what I've put into the account over the past 11 years. Do you just have really shiatty investment options? I've been with two different companies, and both of my 401ks had very good returns.
 
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