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

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Omaha Steve Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Dec-20-08 11:21 PM
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NYT: In Need of Cash, More Companies Cut 401(k) Match

http://www.nytimes.com/2008/12/21/your-money/401ks-and-similar-plans/21retire.html?_r=1&partner=EXCITE&ei=5043



Joe Raedle/Getty Images

FedEx and other pinched companies have cut their contributions to 401(k)’s, which could force some people to work longer.

By MARY WILLIAMS WALSH and TARA SIEGEL BERNARD
Published: December 20, 2008

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.

When the FedEx Corporation slimmed down its pension plan last year, it softened the blow by offering workers enriched 401(k) contributions to make up for the pension benefits some would lose. But last week, with Americans sending fewer parcels and FedEx’s revenue growth at a standstill, the company said it would suspend all of its contributions for at least a year.

“We will have to work more years and retire with less money,” said Lee Higham, a 44-year-old senior aircraft mechanic at FedEx, who has worked there for 20 years. “That’s what we are up against now.”

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.

For workers, the loss of a matching contribution heightens the pain of a retirement account balance shriveling away because of the plunging stocks markets.

“We are taking a beating,” said another FedEx mechanic, Rafael Garcia. “In a year, I lost $60,000 of my 401(k). You can’t make that up.”

FULL story at link.

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billyoc Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Dec-20-08 11:22 PM
Response to Original message
1. I'm so grateful for my Union pension.
I really feel for people who get stuck with 401(k)'s.
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