If the employer paid matching contributions to your 401 (k) plan dollar for dollar the first 3% of the to prepare, then for any cut. As more companies adopt "automatic login" for the 401 (k) plans, has a new research ammunition to them for the performance of the 100% matches.
That research at Harvard and Yale, notes that if the automatic registration is available, cutting the game only creates a "modest" drop-out rate - about 5 to 11 percent. This is to encourage employers, this reductionCost-benefit.
Matching is a bit difficult. Mathematically a dollar-for-dollar match on the first 3% of pay is the same as a 50-cents on the dollar match on the first 6%. But the 50-cent match the employer will lower costs because not every employee will be deferred up to 6%. The dollar-for-dollar match on the first 3% of earnings benefits most people, especially the lower paid who it would be difficult displacement of more than 3% vol.
The new automatic enrollment safe harbor regulations also giveEmployer a justification for cutting to match dollar for dollar. So if you've always been a 100% match on 401 (k) participation, which pay up to 3%, you then start to tell your HR department how important it is for you.
Although the researcher with a 5 to 11 percent decline in pupil numbers "modest" call, it will hurt the least to save for retirement. Lower-paid employees a greater personal sacrifice on the plan and can help to achieve a lower value when the game changed100% of first 3% to 50% of first 6%.
It would also hurt young people who are just starting to invest. By reducing their early contributions, a reduction of the game will force them to more and / or work and save more, because at the beginning, the best way to accumulate retirement.
Ironically, the conclusion of researchers is drawn that a company could make a "non-random" contribution - the contribution for all eligible employees, no employee contributionnecessary, instead of a match. This would also lower paid employees. It would also be the same "profit sharing" approach, given that many employers in favor of 401 (k).
But why should that decision be cast either / or? Either the higher-paid benefits with the appropriate contribution, or the lower-paid benefits with the "non-random" contribution. A company must harm one group to benefit another? Perhaps the concept is simply reflects our disagreement, winner-take-allSociety.
Research
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