Average 401K Matching Contribution?

[OBGibby]

Looking for assistance in determining what the average 401K matching contribution is. My spouse works for a company that has provided 10% matching contributions (10% of salary, regardless of what the employees contribute) for the past 30 years. This sounds like a very generous matching contribution. Can anyone shed some light on how it relates to other 401Ks?

[James48843]

10% matach is extremely generous.

Most places I know of match 3%, some4% or 5%. No one that I know of matched more than 6%.

Benchmark your 401(k): http://www.401khelpcenter.com/benchmarking.html

Here in Michigan, all the auto companies have now stopped their matching funds on 401(k)'s as money-saving for the company, and many smaller companies are now doing the same.

I don't know what company that is that is doing 10% matching,but that sounds like a very, very good deal for you.

[OBGibby]

My spouse's company 10% matching contribution makes our 5% matching from Uncle Sugar look paltry! My only gripe about is that it is a once a year contribution, instead of being spread out like our TSP matching contributions throughout the year. So hopefully, when the funds get deposited in my spouse's 401K it will be when the funds are cheap.

That being said, in light of the current economic situation, we're very fortunate the company is providing any matching contribution.

[squalebear]

That being said, in light of the current economic
situation, we're very fortunate the company is providing any matching
contribution.

Any 401k should be greatful that the company that holds it, is salvent and
the Insurance Company protecting it is too ! Ooops, I forgot, Uncle Sham
has us covered for $250k and China will be covering Uncle Slam.

[James48843]

P.S.- Sounds like an interesting idea to me...

[alevin]

P.S.- Sounds like an interesting idea to me...

I've read other Huffington material, kinda like their style.

[OBGibby]

More food for thought (sorry, article was too long to post due to character limitations on post sizes)...


Big Slide in 401(k)s Spurs Calls for Change

Wall Street Journal
January 8, 2009



http://online.wsj.com/article/SB123137714796462913.html

[Silverbird]

I'd rather have a choice of a 401K and if I don't like my 401K, put it in an IRA and manage it myself. I also like the tax deferral because that means that the total amount I put in gets invested, not after someone's taken the taxes off the top.

As for making the Government plan the model, I have a problem with that, there are conflict of interest reasons that the TSP funds are general rather than individual stocks and industry categories. But if you do NOT have a conflict of interest problem, you will want to pick certain companies or industries and reward them with your investment. Government TSP "rewards" all companies in the SP 500 or the Wilshire 4500, and the International fund EFA companies whether or not their stock looks like a good investment, or not. As for mutual funds, yes, some of them went incredibly haywire. But so did the longer term L funds, and the SP 500, Wilshire 4500 and the I fund. If you don't like your 401K, run, do not walk to the nearest IRA exit.

[ripper]

We have a local company - Hutchinson Technology (HTCH) - that was offering 3% matching to each 1% 401K contribution by its employees, up to a maximum of 3% by the employee.
I'm not sure that they're still doing this, however, due to their recent financial situation. Last week Hutchinson announced layoffs of 30% of its workforce and is currently trading for about $3/share, down from its 52-week high of $24.

[roskopfm]

From a December 08 article at CFO.com

BI, in fact, points to an October survey of 248 employers that Watson Wyatt Worldwide conducted, finding that 2 percent said they had reduced or suspended either their 401(k) and 403(b) matching contributions, while 4 percent said they planned to make similar moves in the next 12 months.
These developments are not unique to the current economic downturn. When the 1990s boom wound down, the average employer match fell from 3.3 percent of earnings in 1999 to 2.5 percent in 2001, according to the insurance publication, citing the Center for Retirement Research at Boston College. It noted that today the average employer match is 3 percent of earnings, citing David Wray, president of the Profit Sharing/401(k) Council of America.
What's more, 80 percent of employers with a 401(k) match employee contributions, while 75 percent of the other 20 percent make some other contribution, such as company stock, according to the report.
There are risks to eliminating the match, however. If younger, lower-earning employees, who have already suffered huge paper losses on their accounts, stop participating in the plans, the higher-earning employees who remain in the plan could be hurt. This is because the plan could fail Internal Revenue Service nondiscrimination tests. BI notes that the tests are required to assure that contributions by highly compensated employees don't exceed contributions by lower earning employees by a certain amount set by law. Highly compensated employees are defined as those who earn at least $105,000 per year.

http://www.cfo.com/article.cfm/12754031/c_12754776