NEW YORK – If you like your companys 401(k) match, you can keep it.
Despite a scare that AOL gave its employees recently, corporate America isnt scaling back 401(k) programs, surveys and employee benefit experts say.
AOL CEO Tim Armstrong announced this month that instead of contributing to an employees retirement in each paycheck, the company would give a lump sum payment at the end of the year, a move that could lower costs but potentially hurt employees savings.
The backlash was immediate, forcing Armstrong to backtrack within days.
While AOLs announcement made headlines, employees who have a 401(k) shouldnt worry. AOLs announcement doesnt reflect a growing trend, employee benefit experts say.
Only eight out of every 100 large U.S. companies wait until the end of the year to make contributions, according to a 2013 survey by AON-Hewitt, a large global human resources consulting firm. That hasnt changed in two years.
IBM also generated headlines in late 2012 when it announced it was changing its 401(k) to an annual match, making it the largest company to use such a program.
Some experts argued that such a move by IBM, one of the largest employers in the U.S. with more than 430,000 employees, could cause a shift in how employers handled retirement plans.
So far, the predictions havent come true.
Overwhelmingly, businesses have told us that they are unlikely to do this, says Rob Austin, director of retirement research at AON-Hewitt.
The 401(k) remains one of the most popular employee benefit programs in the country. Nine out of 10 mid-size to large companies offer a plan for employees. Its also the primary way employees save for retirement, as company pensions and profit-sharing agreements have fallen by the wayside in the last 30 years.
AOL would have been the first large company since IBM to switch to this type of match program, and the publicity was highly critical.
Most companies that use a lump-sum match are banks, where the bulk of an employees salary often comes from a year-end bonus.
Switching from a per-paycheck match to an annual match punishes employees who leave a company before the end of the year. Employees who stay year after year would be unaffected.
The reality is that the 401(k) is not being accessed for 20, 30, 40 years, so an annual match would smooth out over that course of time, says Bruce Elliott, manager of compensation and benefits for SHRM, the Society for Human Resource Management.
Its the employees leaving the organization that are taking a hit, and it especially hurts employees who are laid off.