This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

No End in Sight for Dropped 401(k)s and Decline in Matching

NEW YORK (TheStreet) -- The past two years have been good to stock market investors. The Standard & Poor's 500 Stock Index garnered 13.4% last year, and it's up 25.9% through Tuesday.

But employees may be increasingly losing a grip on those stellar returns, with more companies either eliminating 401(k) plans altogether or reducing their match levels. The 2012 Retirement Plan Survey from American Investment Planners, a Jericho, N.Y., investment advisory firm says 23,000 401(k) plans were eliminated last year -- about 4.5% of all U.S.-based 401(k) plans.

"Of those that terminated, 22% were health care providers," says Brett Goldstein, director of retirement planning at AIP. "Many doctors have terminated their plans because they have merged their practices with larger health care providers."

Even if workers lost nothing by rolling over a plan in a merger, the numerical loss follows a loss of another 19,000 the year before, the report says.

According to the survey, match levels also slid by 4.7% last year, following a 2% decline the year before and 5% drop in 2010.

The decline in matching investments may not be the employer's fault -- at least not entirely, Goldstein says.

"Many employees don't contribute enough to their 401(k) to get the full employer match," Goldstein says. "Employees also prefer cash bonuses as opposed to matching contributions that they can't touch until they turn 59.5. As a result, many employers are cutting back on their 401(k) matching or eliminating it completely to save money."

The downward direction in matching isn't over, Goldstein says.

"Clearly, as businesses look for ways to lower expenses and improve bottom lines, it is not surprising that businesses have stopped matching," he says. "I have been studying this trend for the past four years and don't see the trend abating anytime soon."

That would run against the interest of working-class Americans, who rely on their 401(k) plan proceeds to fund a decent retirement. A Gallup survey reveals that 83% of Americans say 401(k)-type plans are either "very important" or "extremely important" in securing a good financial future.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $132.54 0.88%
FB $80.54 0.07%
GOOG $540.11 -0.44%
TSLA $247.73 0.86%
YHOO $43.48 -0.44%

Markets

DOW 18,232.02 -53.72 -0.29%
S&P 500 2,126.06 -4.76 -0.22%
NASDAQ 5,089.3620 -1.4320 -0.03%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs