Two-thirds of those respondents (approximately 20% of all respondents) report that they will eliminate the match entirely, according to a Grant Thornton press release. Almost 87% of companies reported that their 401(k) plans provided for matching company contributions prior to 2009.
Approximately 34% of companies indicate they feel the reduction or complete elimination of the matching contribution feature would make it less likely that the 401(k) plan nondiscrimination tests (the ADP/ACP tests) for 2009 would be passed, while 38% reported that they did not expect any significant changes in the test results between the 2008 and the 2009 plan years. Almost 10% of companies indicated that they felt the test results would actually improve during the 2009 plan year (which correlates to the 11% of companies that reported that they expected to increase the match during 2009), Grant Thornton said.
Approximately one-third of companies with a matching contribution in their 401(k) plans indicate that they currently have a “safe harbor” 401(k) plan (a plan that is exempt from the 401(k) plan nondiscrimination tests because it provides a minimum level of employer match), and approximately 27% of the plan sponsors with a safe harbor plan report they are considering the reduction or complete elimination of the match during the 2009 plan year.
More than one-third (36%) of companies with a matching contribution in their 401(k) plans reported that they currently have an “automatic enrollment” plan, and approximately 31% of those plan sponsors indicate they are considering the reduction or complete elimination of the match during the 2009 plan year.
283 Grant Thornton U.S. clients participated in the survey. To download a full copy of the survey, “401(k) plan benefits: Rethinking plan design for challenging times’ go to www.GrantThornton.com/cbc.