Many with Suspended 401(k) Match Get DB Benefits

June 11, 2009 ( - A new research report suggests that many workers at companies suspending their 401(k) match are nonetheless covered by a traditional pension plan.

The Employee Benefit Research Institute (EBRI) report by authors Dallas Salisbury and Liz Buser said that of the of 251 401(k) plan sponsors that have suspended matching contributions for their approximately 4.4 million workers, those employing 50% of the workers also maintained an open defined benefit plan.

An additional 16% of workers were with employers funding a frozen defined benefit plan and 8% of the workers were with an employer that had both an open and a frozen defined benefit plan that carried funding obligations, EBRI said.

The EBRI authors said that of the approximate total of 4.4 million workers in the surveyed firms, 20% are with an employer offering an open traditional defined benefit plan and 30% are with an employer with an open cash balance plan. An additional group of workers, which could be as high as 730,000, work for employers that have some union workers and may be required to contribute to multi-employer defined benefit plans, EBRI said.

For the 16% of workers employed by a firm where the only defined benefit plan is frozen (as opposed to those employers that have both an open defined benefit plan and a frozen defined benefit plan), the loss of the 401(k) match is most serious for those who do not have a frozen benefit in the frozen plan because they were hired after the date of the freeze, the report said.

“For the 20% to 30% who are with an employer where the only retirement plan appears to be a 401(k) plan, suspension of the matching contribution likely means no employer contribution to retirement for workers unless and until the match is resumed,” the EBRI researchers noted.

The report is available here .