Starbucks to Exercise Discretion in 401(k) Matching

December 23, 2008 (PLANSPONSOR.com) - Giant coffee retailer Starbucks Corp. has informed employees it will switch to a "fully discretionary match" from a "fixed employer match" for its 401(k) plan, beginning January 1.

The Wall Street Journal revealed the move in a news account which quoted a letter to employees sent last week. The report said the move allows the company more leeway in deciding whether to fund a match contribution in future years, and the company said any 2009 match may be at a different rate than is currently used.The Journal said it saw the letter and company officials separately confirmed its contents.

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“In order to invest and grow responsibly and profitably for the long term, we need to use our benefit dollars in a way that provides the most value to the greatest number of” employees, the letter says, according to the Journal. Starbucks plans to spend about $15 million on a 401(k) match this year, the newspaper said.

According to the news report, Starbucks currently matches between 25% and 150% of the first 4% of eligible workers pay, depending on how long they’ve worked for the company.

Starbucks joins a number of other companies in making similar 401(k) moves (See (k)Plans: Rough Cuts ). However most plan sponsors resonding to a recent PLANSPONSOR survey said they had no plans to change their 401(k) match program (See SURVEY SAYS: What Are Your Plans for Your Match? ).

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