Eliminating a 401(k) match is an easy way for companies to cut expenses without cutting employees. But new research from Fidelity finds that companies offering the equivalent of 3 percent of a participants salary increased worker participation by 9 percentage points. Add in immediate vesting to the 401(k) plan, and that number jumps to 11 percentage points.

When an employer ditches a match,  almost half see a decrease in participation and/or deferral rates. That’s the exact opposite of what needs to happen, as I wrote in this recent column.

Fidelity found that the match had the largest impact on workers in their 30s and 40s. Because of many competing expenses, it’s easy for workers who have their match snatched to say “forget it” and put the cash towards kids or home improvements instead.

How about you? Would you chuck your 401(k) contributions if your employer dumped its share? Or would that prompt you to save even more?

This entry was posted on Friday, February 27th, 2009 at 2:24 pm and is filed under retirement, saving. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.