The Providence, Rhode Island-based manufacturermade the decision to temporarily suspend the company’s 401(k) match in an effort to cut costs. Prior to the suspension, the company had matched $0.50 cents for every dollar the employee contributed, up to 10% of an employee’s wages, a match made entirely in company stock, according to a Wichita (Kansas) Eagle report.
Starting with their first paycheck in May, those nonunion employees who currently contribute to their 401(k) will no longer receive the match. When asked about a possible date the company’s match may be reinstated, Textron spokeswomen Sue Bishop said, “we do expect to revisit it and reinstate it at a later date.” No elaboration as to when that might be was provided.
The decision does not affect 401(k) participants represented by a third party such as a union or employee association.
Textron joins a growing number of companies that are halting matching contributions: Goodyear Tire & Rubber Co, Ford Motor Co, El Paso Corp and CMS Energy Corp. Perhaps most notable is Charles Schwab & Co (See Schwab Suspends 401(k) Match ). Schwab, a staunch supporter of 401(k) plans as a way to save for retirement, announced a temporary suspension of its $2 for every $1 contributed company match in March.
However, a company match is still more the rule among successful DC plans, according to PLANSPONSOR’s annual listing of the Top 100 Defined Contribution Plans by participation rate (See Top 100 Defined Contribution Plans 2003 ). A company match was the most commonly offered plan feature, with 94% of the companies contributing to the retirement pot. Company stock is offered as an option for 32% of respondents.