Coronavirus: Some U.S. companies eliminate employee 401(k) matches to cut costs

As the U.S. economy staggers under drastic government measures to curb the COVID-19 pandemic, some employers are evaluating ways to cut costs. One strategy that’s emerging: Eliminating 401 matching contributions.

“I completely understand the employees’ perspective,” said Nicholas Tzoumas, president of Clearscope HR, an employee benefits firm. “But if you ask them if you would have your employer reduce the match and increase your odds of retaining a job or have your employer keep the match and the [reverse] happens, most employees would rather take a temporary elimination of their match.”

The spokesperson said the company plans to revisit the decision to temporarily postpone the 401 match program later in the year. “My company had us [working] over time going back to maybe even October,” said one of the company’s underwriting analysts who asked not to be named out of concern for her job. “Business seemed good for us, but now there’s some uncertainty with what’s going to happen.”

Making ‘difficult, cost-cutting decisions’As state and local governments shut down non-essential businesses and stores, many retailers are turning to their retirement plan matching as a way to reduce spending.

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