More Employers Reinstating Match in 2010

Research from Fidelity Investments indicated many employers are reinstating employer matching contributions to their 401(k) plans.

By July of 2009, 8% of companies with an employer contribution among Fidelity-recordkept 401(k) plans had suspended the match as the economy continued to weaken and employers looked for ways to cut costs. When surveyed this month about their intentions of bringing back the match, 44% of these employers indicated they have either already reinstated the match or plan to over the next 12 months, according to Fidelity.

Fidelity found reinstatements are more common in larger companies, as roughly 70% of companies with 5,000 or more employees reported already having reinstated the match or planning to do so in the coming 12 months. The rate of reinstatement was smallest at companies with 500 or less employees; 36% said they have reinstated the match or plan to do so in the next 12 months.  

The research indicated that as of December 31, four out of five (80%) plan sponsors offered employer contributions to retirement savings plans as a workplace benefit. Of the plan sponsors for which Fidelity tracks matching data, the most common match rate is 100% on each employee dollar contribution, up to 3%, at 35% of plans. The second most common match, with 14% of plans reporting this rate, is 50% of each employee dollar, up to 6%.  

Fidelity said previous research has shown the average employee participation rate for companies that offer a match is 63%, while at companies that do not offer a match it is 57%.