In Need of Cash, More Companies Cut 401(k) Match

[Dover]

Companies eager to conserve cash are trimming their contributions to their workers’ 401(k) retirement plans, putting a new strain on America’s tattered safety net at the very moment when many workers are watching their accounts plummet along with the stock market.

FedEx is not the only one. Eastman Kodak, Motorola, General Motors and Resorts International are among the companies that have cut matching contributions to their plans since September, when the credit markets froze and companies began looking urgently for cash. More companies are expected to suspend their matching contributions in 2009, according to Watson Wyatt, a benefits consulting firm.

Retirement policy specialists said they did not expect employees to react immediately to the loss of this incentive by stopping their own contributions. Study after study has shown that employees procrastinate when it comes to retirement-plan chores, and in this case the inertia may work, unwittingly, in their favor.

Many of the latest 401(k) cutbacks are turning up in industries with obvious financial problems, like the auto industry, health care and newspaper publishing. Industries that depend on free-spending consumers, like resorts and casinos, are also seeing cuts. Often when one company in an industry cuts its benefits others will follow, to keep their labor costs competitive...>

http://www.nytimes.com/2008/12/21/your-money/401ks-and-similar-plans/21retire.html?_r=2&hp=&pagewanted=all




I wonder...will there be anything left of 401K's and IRA's when the dust finally settles?
Or the bigger question is...is our entire dollar-denominated financial system collapsing (rather than being just a short or long term Depression)?

[Skink]

1. If the company buys their own stock tax exempt why would they stop doing that?

That's how our plan is. We can reinvest their stock contribution every few months.

[chucktaylor]

2. Because the business model is failing?