Filed Under:Markets, Employee Benefits

Companies from Facebook to JPMorgan squeeze 401(k) contributions

A new era of 401(k)

(Bloomberg) -- Employers are squeezing their workers’ retirement savings, holding back on both the amount and the timing of 401(k) matching funds and dragging out vesting schedules. Taken together, these measures are making it more difficult to save for old age.

Major companies that have engaged in such practices in recent years include Whole Foods Market Inc., Facebook Inc., Oracle Corp., Caesars Entertainment Corp. and JPMorgan Chase & Co.

Delayed contributions

The tiff at AOL provides a window into a growing practice among companies of quietly scaling back retirement contributions, according to documents reviewed by Bloomberg. Many companies, including some major U.S. banks that sell investments to retirement plans, now delay their contributions to their employees’ 401(k)s until early the following year, paid in one lump sum rather than through regular payroll checks. Those changes depress employees’ compounded returns. And employees at some companies who change jobs before the end of the year wind up leaving company matches on the table.

Lower match

Caesars Entertainment, the casino resorts and online gaming company, suspended its 401(k) match in 2009, when it was 50 percent of employee contributions up to 6 percent of pay, not exceeding the federal cap. When the company reinstated the match three months into 2012, the maximum contribution was $450 for that year, and it was $600 for all of 2013. Gary Thompson, a company spokesman, declined to comment on the change.

Copyright 2016 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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Nichole Morford

Nichole Morford
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