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(Washington Post)   Some companies are changing the way they match 401(k) contributions. In other news, some companies still match 401(k) contributions   (washingtonpost.com) divider line 49
    More: Interesting, contributions, ETFs  
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1422 clicks; posted to Business » on 04 Feb 2014 at 11:34 PM (41 weeks ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



49 Comments   (+0 »)
   
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2014-02-04 08:57:04 PM  
A bigger story here is that AOL is still around.

From FTA: In order to receive the company match, the employee must be "active" on Dec. 31, 2014. In addition, the contribution will be allocated as a "one time lump sum after the end of the Plan Year."

Watch as AOL has mass layoffs on December 30th.
 
2014-02-04 09:49:18 PM  
It's not that rare subby.  I get matching to 3% of my pay, 50% match for the rest up to 5%.
 
2014-02-04 09:55:50 PM  

Exception Collection: It's not that rare subby.  I get matching to 3% of my pay, 50% match for the rest up to 5%.


When 401(k)s started, the matches were generally better, all as part of the deal to get people to give up pensions.

Boy, was that a longtime ago.
 
2014-02-04 10:30:48 PM  

edmo: Exception Collection: It's not that rare subby.  I get matching to 3% of my pay, 50% match for the rest up to 5%.

When 401(k)s started, the matches were generally better, all as part of the deal to get people to give up pensions.

Boy, was that a longtime ago.


Oh, I know.  My last office had 100% matching up to something like 10% - they just didn't pay enough for anyone to actually do so.  My current company is more of a "wait, companies still do that?" place.

/Wife's old company had a pension
//They discontinued it a year after she started, she was...  displeased.
 
2014-02-04 11:22:56 PM  
My company just increase the 401K match from 25% for the first 5% to 100% for the first 10% of my pay for 2014.

But they did that because they stopped accruing pension benefits beginning in 2014.
 
2014-02-04 11:41:06 PM  
I still have a pension, right up until the moment that my company is bought out.

/Probably will happen right before I retire.
 
2014-02-04 11:41:43 PM  
I still having matching 5% of my pay at 100% and a pension. But new employees don't get the pension. Neither do rehires.

Way it's going, you'll have to save more if you want to retire.
 
2014-02-04 11:42:50 PM  
My company offers 0% matching to any amount.

...Well, at least it's tax deductible.

Though I'd rather contribute to a employer-based Roth plan. My taxes are almost certain to be higher when I retire.
 
2014-02-04 11:43:31 PM  
Old employer put in 5% if you were under 40 and 10% in if you were 40 or over. Didn't matter what you put in, they automatically put money in.

/new place doesn't let you contribute to a 401(k) until you've been there 6 months
//that's next month
 
2014-02-04 11:45:28 PM  

Exception Collection: //They discontinued it a year after she started, she was...  displeased.


She would have been more displeased when she was 70 and the pension failed to pay out. Deferring your compensation for decades and placing it all in the trust of a single company is a big risk that has worked out poorly for many people with "good, old-fashioned pensions".

Not that a 401(k) is the bees knees or anything, but at least you can diversify a bit, and your former employer going bankrupt doesn't also wipe out your retirement savings.
 
2014-02-04 11:57:37 PM  
My employer discontinued our pension program something like two weeks after I was fully vested.  I plan to use my $150/month as beer money.

/I'm going to be pissed if 2060 beer costs more than $30/six pack
 
2014-02-05 12:13:01 AM  
New way to screw the peasants?
*clicks article*
Nope. Just another variation on the theme.
 
2014-02-05 12:26:09 AM  
6% match here.  Federal limit on matching is up to what, $17.5K this year?  Plan accordingly, people.
 
2014-02-05 01:23:07 AM  
The company gets the full benefit of the federal tax deduction for the match and also gets to play with the money for the year. Perfect.
 
2014-02-05 01:31:35 AM  

DenisVengeance: 6% match here.  Federal limit on matching is up to what, $17.5K this year?  Plan accordingly, people.


whoops, I hit my match already!
sigh, not really


I love my 401k, esp since I can control it, mostly.
Unlike those fools at Enron. LOL
 
2014-02-05 02:42:20 AM  

Exception Collection: edmo: Exception Collection: It's not that rare subby.  I get matching to 3% of my pay, 50% match for the rest up to 5%.

When 401(k)s started, the matches were generally better, all as part of the deal to get people to give up pensions.

Boy, was that a longtime ago.

Oh, I know.  My last office had 100% matching up to something like 10% - they just didn't pay enough for anyone to actually do so.  My current company is more of a "wait, companies still do that?" place.

/Wife's old company had a pension
//They discontinued it a year after she started, she was...  displeased.


i think we're 100% up to 3%, and then 50% up to 5%. my old company was 100% of match, but no one could really afford more than a couple % at most.
 
2014-02-05 02:43:55 AM  

namatad: DenisVengeance: 6% match here.  Federal limit on matching is up to what, $17.5K this year?  Plan accordingly, people.

whoops, I hit my match already!
sigh, not really


I love my 401k, esp since I can control it, mostly.
Unlike those fools at Enron. LOL


I worked at a company that did 100% match up to 5% of your check, so each dollar got you a "free" dollar up to 1/20th of your pay if you participated. Only catch was, the match was in company stock priced at the time of your paycheck. The match had a vesting schedule, so I don't think you could dump the company stock match immediately.

Savvy/dweeby coworkers watched their shiat like a hawk and swapped the company stock out for generic 401k shiat as soon as they could. I was all ignorant, and so when we finally got laid off, I couldn't dump that garbage in time. We got "blacked out" courtesy of BofA and the company stock tanked.

My 401k dropped by ~40% that month and I couldn't do shiat about it. This happened a few months after the Enron debacle, so all my old coworkers said we'd gotten "Enron'ed".

I ended up keeping the carcass of my 401k match in there as a reminder, and who knows, maybe another company will end up buying the one that bought mine and I can cash it out.
 
2014-02-05 02:47:02 AM  

ekdikeo4: Exception Collection: edmo: Exception Collection: It's not that rare subby.  I get matching to 3% of my pay, 50% match for the rest up to 5%.

When 401(k)s started, the matches were generally better, all as part of the deal to get people to give up pensions.

Boy, was that a longtime ago.

Oh, I know.  My last office had 100% matching up to something like 10% - they just didn't pay enough for anyone to actually do so.  My current company is more of a "wait, companies still do that?" place.

/Wife's old company had a pension
//They discontinued it a year after she started, she was...  displeased.

i think we're 100% up to 3%, and then 50% up to 5%. my old company was 100% of match, but no one could really afford more than a couple % at most.


We're 25% match up to 4% of check at the place I'm at now, so four dollars gets you five. Lame but better than nothing.

We have a four/ten hr schedule though; every Friday off is worth way more than straight money.
 
2014-02-05 03:02:37 AM  
My company matches 401K contributions using a company stock fund.  So far, it has outpaced a number of fund indexes, so I haven't converted it yet.
 
2014-02-05 03:23:04 AM  
My company match:  $10/payroll.  Paid 2x/mo.

/Ya rly
//:(
 
2014-02-05 05:23:19 AM  
FTA:  After IBM's announcement, Aon Hewitt, which consults on human resources, surveyed companies to see if they would follow.

My previous employer switched to Aon Hewitt from somebody else a few years ago. Aon Hewitt has their own "investment vehicles" where the old one let us pick actual mutual funds and even individual stocks within the 401(k). You couldn't independently research the Hewitt funds. Hewitt decided that the varying funds I had were all in the same "family" as one of their funds.

When I left the old job, I rolled my 401(k) into a rollover IRA at a discount brokerage. Hewitt: "But, but, you can stay with us and let us help you manage your funds." How about no? Does "no" work for you?

Haven't started the new place's 401(k) yet, the weather led to some "small" (slightly less than our deductible) casualty losses for us  :-(  They match 100% up to 3%, paid monthly, vests in three years.
 
2014-02-05 06:11:49 AM  
...The company that owns my workplace - through a couple of layers of divisions - matches us 100% up to 6%.  My only complaint is that I didn't start sooner.
 
2014-02-05 06:19:46 AM  
Mine has weird rules due to attempting to phase out pensions.  Based on age, tenure, and matching, it ranges between 6.5% and 10%.  I'm not complaining at the moment.  Bulk matching would be bullshiat though
 
2014-02-05 06:59:05 AM  
6% matching here as well. Not like it matters when all the stocks tank on the Gold Bubble or some carp. Not like the average person really retires anyway.
 
2014-02-05 07:09:21 AM  
My company matches my 401k and still offers a pension, although the pension seems like a pittance. I've put six years + with this company and am currently awarded....$36.78 a month for the rest of my life. Who needs SS?

Don't get me wrong. I'm grateful that the company even offers a pension but if I would gladly swap it out for a more generous 401k contribution.
 
2014-02-05 07:32:52 AM  
I wonder if the same shiatheads pushing this stuff stand there in the benefits meeting and extol the virtues of dollar cost averaging.

And I'm guessing that if this ever catches on, there will be a mystifying jump in stock prices around Dec 31st, followed by an immediate sell-off on January 2nd.
 
2014-02-05 07:42:16 AM  
My company matches 5%. I hope to depend on fraud and conniving for my retirement.
 
2014-02-05 07:43:05 AM  

profplump: Deferring your compensation for decades and placing it all in the trust of a single company is a big risk that has worked out poorly for many people with "good, old-fashioned pensions".


It worked for people who were employed during the times when you could count on a company to be honest and actually fund the pension plans on a regular basis instead of the modern "We'll short it now, use the money for bonuses and operational expenses, and *MAYBE* pay it back later when the bill comes due."  All of my grandparents did well with their careers and had employers who planned for long-term stability, including fully funding pension contributions as they agreed to do for employees.
 
2014-02-05 07:45:46 AM  
Over the past 10 years at my previous company they:
1) Froze the pension
2) changed from 100% match on 3% max - to 50% match on 6% (so you had to cough up 6% salary instead to get full match - not everyone could afford 6% off the top)
3) apparently that did not save enough - now they do the lump sum at the end of the year crap (thanks for the loss of dollar cost averaging)

Glad I left - they are just following the trend
 
2014-02-05 07:57:48 AM  

mrmopar5287: It worked for people who were employed during the times when you could count on a company to be honest and actually fund the pension plans on a regular basis instead of the modern "We'll short it now, use the money for bonuses and operational expenses, and *MAYBE* pay it back later when the bill comes due."  All of my grandparents did well with their careers and had employers who planned for long-term stability, including fully funding pension contributions as they agreed to do for employees.


That, too, was an anomaly.

Our grandfathers' grandfathers didn't have pensions.  They worked until they couldn't anymore, and then moved in with one of their children.
 
2014-02-05 08:02:53 AM  
if i put in 3% I get a 10% match to my TIAA-CREF 403(b) with immediate vesting. of course the old people get real pensions, but considering that I get paid shiat in academia, this is probably the best deal going.
 
2014-02-05 08:10:41 AM  

Dinjiin: My company matches 401K contributions using a company stock fund.  So far, it has outpaced a number of fund indexes, so I haven't converted it yet.


Read Bonzo's post two up from yours.  Even if it is doing well now, you may want to move a percentage into a more diversified fund like an S&P500 Index just in case things change where you work (fyi -- things always change).
 
2014-02-05 08:18:40 AM  

Unobtanium: My previous employer switched to Aon Hewitt from somebody else a few years ago. Aon Hewitt has their own "investment vehicles" where the old one let us pick actual mutual funds and even individual stocks within the 401(k). You couldn't independently research the Hewitt funds. Hewitt decided that the varying funds I had were all in the same "family" as one of their funds.


I am a huge fan of S&P 500 Index funds for 401(k) investing.  They historically grow at about 7% with a 2% dividend and low fees in the .25% range.  My company switched management companies to one that had its own vehicles.  There was no S&P 500 Index fund.  There was one that "attempts to match S&P 500 performance" with a 4% fee.  It was a huge ripoff.  How hard is it to match S&P 500 performance?  No research or expertise is required; just buy the stocks on the S&P 500.  It doesn't justify an 800% increase in the fee.
 
2014-02-05 08:46:33 AM  
My company used to have a 3% 401K match and a pension.  Over the years, whenever they changed our benefits for the worse, they made sure to say "Hey, at least you have both a pension and a 401K match.  Not many people can say that any more, you should be happy with what you've got."

Then, they took away the 401K match, replacing it with a end-of-year "Profit Sharing" payment to the 401K if we hit a certain profit goal.  Needless to say, we didn't hit it the first year.  They made sure to say "Hey, at least you have a pension.  Not many people can say that any more, you should be happy with what you've got."

Now, for 2014, they stopped funding the pension, and gave us a 2.5% 401K match.  We still have the end of year payment, supposedly we're going to get something for 2013, but no one knows the details.  Guess what they told us when they announced the changes?
 
2014-02-05 08:58:45 AM  
If you are in your companies 401k plans you are getting snukkered -  http://www.pbs.org/wgbh/pages/frontline/retirement-gamble/
 
2014-02-05 09:56:30 AM  

moefuggenbrew: If you are in your companies 401k plans you are getting snukkered -  http://www.pbs.org/wgbh/pages/frontline/retirement-gamble/


Funny I had the exact opposite takeaway from that show -- the people who are screwed are the ones who didn't save enough (or at all), and now it's too late and they're "snukkered".

I don't claim to be any kind of genius, but I've been maxing my 401(k) every year for over 20 years (rolling it out to IRAs when I changed jobs), and I'm doing OK.
 
2014-02-05 10:07:46 AM  

flaminio: moefuggenbrew: If you are in your companies 401k plans you are getting snukkered -  http://www.pbs.org/wgbh/pages/frontline/retirement-gamble/

Funny I had the exact opposite takeaway from that show -- the people who are screwed are the ones who didn't save enough (or at all), and now it's too late and they're "snukkered".

I don't claim to be any kind of genius, but I've been maxing my 401(k) every year for over 20 years (rolling it out to IRAs when I changed jobs), and I'm doing OK.


You'd be amazed the number of people who don't think about retirement until they're over 40. I've been doing the same as you (but with RRSPs) as well as picking up some real estate at tax sales as investment properties. There is risk in all forms of retirement planning but that risk is necessary...

I once attended a retirement planning workshop a couple years ago in my late 20s and got some great ideas. There were a bunch of people who were (before the meeting) 4 or 5 years away from retirement but had never saved a dime... many left the meeting in tears since they knew then that they could not retire. I have a feeling some of them considered a more active retirement plan of setting up a large insurance plan on a family member and then creating an 'accident' for the payoff.

/I lie, you won't be amazed.
 
2014-02-05 10:55:35 AM  
My company puts in an amount equivalent to about 15% of my salary without me needing to take a penny out of my pay. I don't expect to ever see a retirement benefit that good ever again.
 
2014-02-05 11:30:01 AM  

moefuggenbrew: If you are in your companies 401k plans you are getting snukkered -  http://www.pbs.org/wgbh/pages/frontline/retirement-gamble/


You completely missed the point of that show. Not that many companies don't have completely inappropriate fund selections and fees, they do. But lot's don't. For example my company used fidelity funds - we don't have a single fund with expenses over 1%. The scary example he used on his show was 2%.
 
2014-02-05 12:02:04 PM  

Exception Collection: edmo: Exception Collection: It's not that rare subby.  I get matching to 3% of my pay, 50% match for the rest up to 5%.

When 401(k)s started, the matches were generally better, all as part of the deal to get people to give up pensions.

Boy, was that a longtime ago.

Oh, I know.  My last office had 100% matching up to something like 10% - they just didn't pay enough for anyone to actually do so.  My current company is more of a "wait, companies still do that?" place.

/Wife's old company had a pension
//They discontinued it a year after she started, she was...  displeased.


The company I work for matches dollar for dollar up to 5% - with a 6% bonus and 3% yearly raise. They also pay for 6hours of undergrad education/sem and all the certifications I care to study for (only pay once though so if you fail it you're buying the next one). In return they get a motivated employee that works to better the company through self improvement. Is invested in reporting waste and abuse and looks for ways to improve overall efficiency.

Now the bad part, management is stagnant. There are only so many places to go "up" to because people want to work here for life.
 
2014-02-05 12:09:18 PM  

JohnBigBootay: moefuggenbrew: If you are in your companies 401k plans you are getting snukkered -  http://www.pbs.org/wgbh/pages/frontline/retirement-gamble/

You completely missed the point of that show. Not that many companies don't have completely inappropriate fund selections and fees, they do. But lot's don't. For example my company used fidelity funds - we don't have a single fund with expenses over 1%. The scary example he used on his show was 2%.


He didn't do the expenses right, either. His example took $100,000 and applied an expense to it, resulting in a lot less money years later. But it completely ignored gains.

If you're invested in an index mutual fund, you're probably getting about 10% over time. Even if there's a 2% expense (which would be shockingly high for an index fund), that's still 8% to the good.
 
2014-02-05 12:46:09 PM  

youmightberight: Exception Collection: edmo: Exception Collection: It's not that rare subby.  I get matching to 3% of my pay, 50% match for the rest up to 5%.

When 401(k)s started, the matches were generally better, all as part of the deal to get people to give up pensions.

Boy, was that a longtime ago.

Oh, I know.  My last office had 100% matching up to something like 10% - they just didn't pay enough for anyone to actually do so.  My current company is more of a "wait, companies still do that?" place.

/Wife's old company had a pension
//They discontinued it a year after she started, she was...  displeased.

The company I work for matches dollar for dollar up to 5% - with a 6% bonus and 3% yearly raise. They also pay for 6hours of undergrad education/sem and all the certifications I care to study for (only pay once though so if you fail it you're buying the next one). In return they get a motivated employee that works to better the company through self improvement. Is invested in reporting waste and abuse and looks for ways to improve overall efficiency.

Now the bad part, management is stagnant. There are only so many places to go "up" to because people want to work here for life.


Aside from raises/bonuses, sounds like my office.

I get 160 H/V/S hours per year (one pool), 5k deduct/4.5k OOP max insurance, $2500 HSA contribution, the matching 401k I already mentioned, $1k of educational/development/networking funds, $1k of matching contributions to apolitical/non-religious charities, my hours are allowed to vary widely (+/- 2 hours from 8-5 as routine, min. 4 day weeks, and for special stuff it's just a matter of making sure everything gets done - I work Tu-Fri normally, but working M-Thu this week so I have F-M off), and I get paid well.
 
2014-02-05 03:23:30 PM  
So when IBM changed its 401(k) system in 2012 to hand out employee matches in one lump sum at the end of the year, there was an uproar. Those who left the company before Dec. 15 would not see any matched dollars unless they were retiring. And employees would also miss out on all the compounding throughout the year from the contributions.

Chase did this in 2010, the month before they laid me off. Total BS.
 
2014-02-05 03:35:54 PM  

Muta: Unobtanium: My previous employer switched to Aon Hewitt from somebody else a few years ago. Aon Hewitt has their own "investment vehicles" where the old one let us pick actual mutual funds and even individual stocks within the 401(k). You couldn't independently research the Hewitt funds. Hewitt decided that the varying funds I had were all in the same "family" as one of their funds.

I am a huge fan of S&P 500 Index funds for 401(k) investing.  They historically grow at about 7% with a 2% dividend and low fees in the .25% range.  My company switched management companies to one that had its own vehicles.  There was no S&P 500 Index fund.  There was one that "attempts to match S&P 500 performance" with a 4% fee.  It was a huge ripoff.  How hard is it to match S&P 500 performance?  No research or expertise is required; just buy the stocks on the S&P 500.  It doesn't justify an 800% increase in the fee.


4% is criminal.
 
2014-02-05 03:43:21 PM  

Mike Chewbacca: So when IBM changed its 401(k) system in 2012 to hand out employee matches in one lump sum at the end of the year, there was an uproar. Those who left the company before Dec. 15 would not see any matched dollars unless they were retiring. And employees would also miss out on all the compounding throughout the year from the contributions.

Chase did this in 2010, the month before they laid me off. Total BS.


Care to guess what's coming in the next few months?

*puts on tinfoil baseball cap over kippah*
Dear Senator Warren, ...
 
2014-02-05 03:48:59 PM  

flaminio: He didn't do the expenses right, either. His example took $100,000 and applied an expense to it, resulting in a lot less money years later. But it completely ignored gains.


I noticed that as well. My boss showed me that part and I said, 'you know, I get his point but it's pretty disingenuous of him to not illustrate any gains. There's lots of shiatty funds but pretty much none of them average zero gains. He's undermining his own good point with a half-truth that's not indicative of real world performance. The truth is bad enough - he should use a better example."
 
2014-02-05 04:46:05 PM  

flaminio: moefuggenbrew: If you are in your companies 401k plans you are getting snukkered -  http://www.pbs.org/wgbh/pages/frontline/retirement-gamble/

Funny I had the exact opposite takeaway from that show -- the people who are screwed are the ones who didn't save enough (or at all), and now it's too late and they're "snukkered".

I don't claim to be any kind of genius, but I've been maxing my 401(k) every year for over 20 years (rolling it out to IRAs when I changed jobs), and I'm doing OK.


Same reaction I thought all their interviewees were people who maybe spent 5 minutes their whole life researching the biggest life event that will ever happen to them.

If you spent more time on an average movie search on Netflix than you do thinking of retirement your going to have a bad retirement.
 
2014-02-05 08:54:26 PM  

Exception Collection: It's not that rare subby.  I get matching to 3% of my pay, 50% match for the rest up to 5%.


That's the norm for new plans these days. Most are Safe Harbor plans, and that's the minimum allowed.
 
2014-02-06 06:58:43 AM  

dustman81: A bigger story here is that AOL is still around.

From FTA: In order to receive the company match, the employee must be "active" on Dec. 31, 2014. In addition, the contribution will be allocated as a "one time lump sum after the end of the Plan Year."

Watch as AOL has mass layoffs on December 30th.


Not getting a kick, etc. My company had mass layoffs 2 weeks before the annual 401k match paid out - and our bonus is now delayed until March 15. Rolling over that 401k immediately

/ Plan to be long gone before then
 
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