Tenn. Employer Changes 401(k) Match to Encourage Deferrals

A news story in the Leaf-Chronicle newspaper said board members were looking for a new plan that would “provide strong incentives for the employees to increase their own personal savings.”

So, CDE is keeping its existing 401(k) plan, but will change the match to a dollar-for-dollar payment up to 3% of base pay, and a “progress-sharing” contribution of 3% of base pay. According to the news account, if an employee saves at least 3% of his pay, he will receive a 6% match from CDE. The match will be lower if he saves less than 3%, the newspaper said.

The employees’ current Target Benefit Plan and the Money Purchase Pension Plan will be merged into the modified 401(k) plan, and no further contributions will be made to them, the Leaf-Chronicle said.