Kiss Those Matching Funds Goodbye?

Don't be surprised if Obama and company use this as a rationale to try and pull more now tax-deferred dollars under government control. We all know what good stewards of our money they've been when it comes to Social Security.

If you've watched your 401k get rocked by the economic downturn, there's an increased liklihood it's going to take longer than you thought to climb back. Many companies have already stopped matching 401k contributions to cut costs. Boyd Gaming in Nevada is another, as is Motorola. FirstMerit out of Ohio. Dollar Thrifty Car Rentals cut it but says it will reinstate the program next year.

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.

Any way you look at it, for now it's a trend. It was always considered a way to attract good employees. There's less incentive for that with unemployment going up and it is a perfectly legal way for a company to cut costs.

Comments

[Scrapiron]

O'Dumbo's regime has already announced that industry would lose the ability to charge off the 401K contributions and that the individual 401K's will become a government controlled fund like SS. All companies will drop the contributions since it will become another gift to the government. Not like they don't already pay 95% of the federal tax burden. There has never been a democrat born who wants the 'average' working American to get ahead. Have to keep them beat down so they'll vote democrat in hope the democrats lies aren't lies. It's must be bad to be poor, stupid, and a democrat. "The poor have been voting democrat for 50 years and they're still poor." (someone)

[WAHOO WILLIE]

You ain't seen nothing yet. Wait til the morning you wake up to find that anyone making 75k a year is one of the "evil rich"

[IslamoLlama]

"-- We all know what good stewards of our money they've been when it comes to Social Security. --"

Given how the Bush Admin wanted to stuff the $2 trillion dollar trust fund into Wall Street just 3 years ago, I'd say that the Democrats have done a bang up job with Social Security.

Given that the average 401(k) has dropped between 40% and 60% in the last three months, I'd say that Obama's plan is nothing if not a gift delivered on angel's wings for anyone wanting to retire before 2012.

Given that Obama's system is currently a chalkboard sketch that would be purely optional, I think you're once again diving over the deep end of absurdity when you've got guys like Willie announcing how modifications to the 401(k) program spell the political downfall of the "rich". As the current focus is the spiraling recession and the current economic wisdom is that "tax hikes + recession = more recession" and Obama would like to see a second term, I'm not sure where the bedwetting fears of incoming massive tax hikes are coming from.

If anything, you should be bitching that an Obama Administration will signal continued chronic debt and busted budgets because there's no other way to raise the capital necessary for stimulus and recovery. Instead, you're complaining about how Obama wants to be too nice to old folks on the verge of retirement with retirement accounts that have been ground to dust. :-p

[WAHOO WILLIE]

"I'm not sure where the bedwetting fears of incoming massive tax hikes are coming from."

From experience Pookie. If you had any you wouldn't have to ask.

[WAHOO WILLIE]

"Given that the average 401(k) has dropped between 40% and 60% in the last three months...."

Anyone who sat back and watched their 401k fall that far deserves to be dependent on social insecurity. And no, I'm not worried about the "rich".....well unless the definition continues to fall down the scale. Since I'm actually aquainted with "average americans" who think having just over 200,000 in a 401k it took them 20 odd years to build, it is them I concern myself with. I hope I'm wrong, I hope we don't revisit punishing some poor guy's kids who make a couple hundred grand selling his life long accumulation. I hope we dont go back to taxing people's savings accounts and I certainly dont want to see some guy who is struggling to do without 5% of his pay not get his employers matching deposit.......Again Pookie, it's living an actual life, being around grown ups......not sitting in awe of professor ponytail, the life long acedemic.

[Rob Crawford]

"Given how the Bush Admin wanted to stuff the $2 trillion dollar trust fund"

What trust fund?

[WAHOO WILLIE]

"What trust fund?"

Rob I believe that's the one that congress keeps borrowing from to pretend they are balancing budgets. Kinda like back in the 90's when Clingon took 84 billion out of federal employee retirements to help build his "surplus". Bush's big plan was to let you keep 1-2% of YOUR OWN money to invest as you wished (didnt have to be stocks) rather than throwing it into social insecurity....but you probably knew that.

[Lala]

The Trust Fund? That's when they take the social security taxes and put it into Treasury Notes and pay interest on it. Or so I've been told. hahaha

[IslamoLlama]

"-- From experience Pookie. If you had any you wouldn't have to ask. --"

Oh, you mean like when Clinton raised the SS tax from 5% to 6.2%... oh wait, that was Reagen. Maybe you mean like when Clinton raised the tax rate on the wealthiest Americans... oh wait, that was Bush 41. Perhaps you were referring to when our nation had the highest taxes on record with millionaires being taxed at 95% of every additional dollar earned... oops, that was Eisenhower.

Which "experience" are you borrowing from and what country were you in when you "experienced" it?

"-- Bush's big plan was to let you keep 1-2% of YOUR OWN money to invest as you wished (didnt have to be stocks) rather than throwing it into social insecurity....but you probably knew that. --"

And since existing contributions to the the SS system are what pay the benefits of the current beneficiaries, this 1-2% would come from... ... ... Even Bush didn't know where he was going to find the trillions necessary to fund his scheme. Meanwhile, he wasn't shy about tapping the SS trust to his own benefit in efforts to pay for the double-Asian-land-war in Afghanistan and Iraq.

While Al Gore was arguing for a lock box on the social security treasury, I remember Bush talking about a $1.6 trillion tax cut focused primarily at cuts to the capital gains rate and the top income bracket (those making $250k+ / year). Funny how Bush failed to address actually securing SS deposits during the first two years and only became concerned with solvency in his scheme to turn the fund into 401(k) lite.

It still doesn't really answer how converting the SS fund to private accounts would have protected any retirees from the market failout of the last 3 months. Currently, folks with money in the market are being forced to scale back retirement plans substantially while folks only concerned with their social security checks aren't concerned at all.

I'd mark that as a point in favor of SS over 401(k).

[IslamoLlama]

"-- The Trust Fund? That's when they take the social security taxes and put it into Treasury Notes and pay interest on it. Or so I've been told. hahaha --"

And since the Treasury Notes are about the only financial papers currently holding their value, I can see how this would be something to laugh at.

Folks would be much better off putting their money in CDOs and derivatives. I hear those markets are hot, hot, hot!

[WAHOO WILLIE]

"Oh, you mean like when Clinton raised the SS tax from 5% to 6.2%... oh wait, that was Reagen."

Wow it sometimes doesn't take even you to catch up...Dunno who Reagen is though. Whatever, absolutely correct. Oh and I go back to Eisenhower, so yeah, that'd be the experience I speak of. Now strangely...well not for you...you seem bent on only mentioning increases in bayonet point robbery committed by repugnican (presidents) at least two of whom were in office before you were born. I imagine that is because I mentioned that it was Clingon who borrowed from federal retirements (among other smoke and mirrors) to pretend there was a surplus. Doesn't matter, there isn't a nickle's worth of difference between one robber and the next. You're right about another thing too. CDs would be much better than t-bills math girl since bills are pating less than 2% and I just got a cd paying 5%. You interned for a CPA you should be able to figure the difference.......

[MokBeerve]

Íå çà÷åò!

[SacTownMan]

20 years ago when I started with my current company I received almost 20% of my annual wage in retirement money. This was divided between a 401k and a "retirement account". The feds made the company do away with that and just leave the 401k.

It then became 16.8% and when times were tougher in the early nineties it dropped to 15% then 13.5% and finally 11% where it remains today. This is still better than many private companies provide in my area but not as nice as some area govt. entities with guaranteed lifetime benefits.

While I have planned for retirement it always amazes me the number of people out there that live paycheck to paycheck while waiting for Uncle Sam to bail them out and provide free healthcare. Those folks are in for a rude suprise when the well runs dry after all of these bailouts come due in twenty years!

[old trooper]

Social Security has been insolvent for the past two decades and that covers several Administrations and the fine Members of Congress during that timeframe as having their hands in the big cookie jar.

The current 401k problem has roots in a lack of oversight from a Democrat Majority Congress for the past two years. Dick Tracy Waxman was too busy holding hearings on steroid use in baseball, Barney Frank & Chris Dodd were posturing as Committee Heads and did not have a clue on Banking until (Overnight?) when it was revealed that the market was tanking. They could have put the brakes on two years ago but did absolutely nothing to curtail the Money Changers or fix Social Security.

After spending 28 years in the Military, nice pension, investing in Peabody Energy low sulphur coal that has only dropped 4%, buying undeveloped land and living within my means, I don't expect a dime from Social Security, managed my own money instead of trusting some suits in New York or Chicago. It is sad that so many trusted so few to look after them. I never did.

The finger pointing will continue for the next few years but the since You All elected Spanky & Our Gang to rule Congress & the White House, lets see what happens after 20 January 09. No sarcasm intended here but You ain't seen nothing yet.

[IslamoLlama]

"-- The current 401k problem has roots in a lack of oversight from a Democrat Majority Congress for the past two years. --"

Pardon? The entire economic train wreck was the result of the last two years? Poppycock! Nonsense! I was told on good authority that "the fundamentals of the economy are sound" not more than four months ago. What legislation did the Democrat Majority Congress pass (or renew or fail to renew) in the last 2 years that directly resulted in the derivative market meltdown? Please give me the legislation that this Congress was responsible for.

I can point to the repeal of Glass-Steagal by the Graham Bill back in '99 as my scapegoat. Surely you've got corresponding legislation.

"-- I imagine that is because I mentioned that it was Clingon who borrowed from federal retirements (among other smoke and mirrors) to pretend there was a surplus. --"

No doubt borrowing from SS to pay for defense spending was an excellent little smoke-and-mirrors game played by Clinton. I'm in total agreement that we should have rolled back our grossly overspent military budget back in '96 and '98 while adopting the Gore "lock box" approach to the SS Trust.

That said, Clinton's pretend surplus still managed to out scale Bush's very real $5 trillion eight year budget deficit. The Treasury hasn't missed a deficit payment since the Revolutionary days, so I consider T-Bills a fairly safe and sound investment even if it is "smoke and mirrors" to claim the budget is balanced.

"-- You're right about another thing too. CDs would be much better than t-bills math girl since bills are pating less than 2% and I just got a cd paying 5%. You interned for a CPA you should be able to figure the difference....... --"

CDOs - Collateralized Debt Obligations - not CDs - Certificates of Deposit. The latter are issued by banks as a form of savings account with a higher yield that require you lock in your money for a set period of time. The former are what the banks then invest your money in when they aim for still higher returns.

And if you put your money with Bernie Madoff, I hear you could do even better. :-p

Also worth noting that CDs are commonly FDIC insured. So, sure, you could put your SS into CDs today, but you'll still be banking on the government's ability to pay you back should the bank you've invested in go belly up. Social Security is designed as a trust fund that serves as a safe investment, not as an opportunity to gamble your money away.

All that "experience" clearly hasn't earned you much "knowledge". You don't need to be a CPA to learn these things.

[old trooper]

It was a Failure to Act re; 401ks. That should have been obvious. The signs were out there.
If you have the good sense to read them. Congress did nothing when it could have been avoided.

[WAHOO WILLIE]

"All that "experience" clearly hasn't earned you much "knowledge". You don't need to be a CPA to learn these things."

Absolutely correct once again Pookie. You're so smart and I'm a dumbass. I should never, ever have sacrificed any of my paychecks so that I could retire at 50 years old. Shit here I am suffering at 85% of what I was making when I left. Should probably give up that rental income too since the extra adds up to 107% of what I was making. Damn, I feel soooooo stupid!! Here I could still be paying taxes, worked 15 more years and gotten an SS check for $1700.00 a month.......Damned stupid ass ambition. Why weren't you there to help me when I was making all the wrong choices?

[old trooper]

According to VP Elect Biden, it is Patriotic to pay more Taxes. My 28 Years of Service are done. That was my sense of Patriotism. Three Wars, three "peacekeeping" missions and a couple of County Fairs later, paying more in Taxes is not Patriotic, it is very foolish.

Giving Spanky & Our Gang more money to piss away is just not prudent. I have been retired for three years now, hold title to my home & land, owe nothing on my vehicles, give to charities of my choosing and I have earned the right to tell the Commander in Chief or Members of the Parliament of Whores in DC or anyone else to go piss up a rope. Those who ran businesses or banks into the ground can file Chapter 11 and have the same protection under the Law that I have. No incompetent or crook is above the Law or too big to fail. Period.

The bailouts are rape, pillage & plunder of the US Treasury and those that grant it are criminals.

[IslamoLlama]

"-- Here I could still be paying taxes, worked 15 more years and gotten an SS check for $1700.00 a month.......Damned stupid ass ambition. --"

That's the way the system is designed. The smart cookies go out and turn their paychecks into bigger paydays down the line. The dim bulbs that don't sock enough money away or the unlucky folks that crap out fall into the Social Security safety net.

Clearly, you're a smart cookie or you wouldn't be bringing down 107% of your old pay check late into your twilight years. However, if you'd been unfortunate enough to have your job shipped overseas, if you'd suffered an early age heart attack and been bedridden for months or years, if your rental property got swept away in an accident your insurance didn't cover, or if you just didn't think twice before putting it all on the line in Bear Sterns and AIG back in January, that $1700 / month would be looking like a pretty sweet deal right now.

Your argument seems to be "I don't need a safety net because I never take a fall" and history has been kind enough to you that this is true. Likewise, I occasionally stomp my heels when paying my car insurance bill because I don't need insurance when I never get in wrecks. Yet, in the glorious State of Texas, our government saw fit to mandate everyone have insurance on the off chance we're not all good drivers. And in the God Blessed United States our forefathers saw wisdom in designing a senior's security system to guard against the uninformed or unfortunate elderly.

If you don't like the system, you had ample opportunity to move to one of those free spirited first world countries that didn't use a similar system. Like... ... ... hmm... ... :-p

[WAHOO WILLIE]

Oh no Pookie, dont get me wrong. There is a great need for that safety net if only for the reasons you stated. The generation who was sold it as the be all end all is still around. Our discussion, and my point, seemed to be centered around allowing oneself to fall into believing it will be there, and enough to live on. It may be there, but it wont be enough to live on. I do believe that people should have the option to direct at least a portion of that money to something that they can pass on. I realize of course that most people are to lazy (and some uninformed) to do that.