Two-thirds of those respondents (approximately 20% of all respondents) report that they will eliminate the match entirely, according to a Grant Thornton press release. Almost 87% of companies reported that their 401(k) plans provided for matching company contributions prior to 2009.
Approximately 34% of companies indicate they feel the reduction or complete elimination of the matching contribution feature would make it less likely that the 401(k) plan nondiscrimination tests (the ADP/ACP tests) for 2009 would be passed, while 38% reported that they did not expect any significant changes in the test results between the 2008 and the 2009 plan years. Almost 10% of companies indicated that they felt the test results would actually improve during the 2009 plan year (which correlates to the 11% of companies that reported that they expected to increase the match during 2009), Grant Thornton said.
Approximately one-third of companies with a matching contribution in their 401(k) plans indicate that they currently have a “safe harbor” 401(k) plan (a plan that is exempt from the 401(k) plan nondiscrimination tests because it provides a minimum level of employer match), and approximately 27% of the plan sponsors with a safe harbor plan report they are considering the reduction or complete elimination of the match during the 2009 plan year.
More than one-third (36%) of companies with a matching contribution in their 401(k) plans reported that they currently have an “automatic enrollment” plan, and approximately 31% of those plan sponsors indicate they are considering the reduction or complete elimination of the match during the 2009 plan year.
283 Grant Thornton U.S. clients participated in the survey.To download a full copy of the survey, 401(k) plan benefits: Rethinking plan design for challenging times, go to www.GrantThornton.com/cbc ,
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