Companies are starting to restore matching contributions to their 401(k) plans after extensive cost-cutting and signs of improvement in the economy.
Experts say these companies represent the first batch in what could be a major round of restoring company matches in coming months.
In recent weeks, executives at Kulicke & Soffa Industries Inc., Zep Inc. and The San Diego Union-Tribune LLC said they would resume making matching employee contributions to their 401(k) plans. A fourth company — Starbucks Corp. — announced late last month it will make a matching contribution for 2009, after last December making its 401(k) plan match discretionary, based on company profitability, because of concerns about the company's financial health.
These announcements follow moves by Dollar Thrifty Automotive Group Inc. and The Goodyear Tire & Rubber Co., which reinstated their matches in January. (Goodyear had stopped making contributions to its 401(k) in 2003, and while it has reinstated its match, it has frozen its $4.26 billion pension plan).
“There are certainly other companies that are restoring contributions, and many others that are now talking about it,” said Bill McClain, a principal in the Seattle office of consultancy Mercer, who declined to disclose names citing company policy. “In some cases we're going to see a return to a discretionary match or to a lower rate match, but we'll see more companies returning as we head into 2010.”
In a filing with the Securities and Exchange Commission earlier this month, semiconductor equipment maker Kulicke & Soffa, Fort Washington, Pa., said it would resume making matching contributions to the employees' 401(k) savings plan. The match, which according to the filing was halted in January, will resume Sept. 1. Company spokesman Thomas Johnson referred calls to David Anderson, vice president and general counsel, who did not return a call seeking comment. The plan had $37.98 million in assets as of Dec. 31, according to another filing.
Atlanta-based Zep restored a portion of its 401(k) matching contribution in July, after halting contributions in January. The plan, which had matched 50% of employees' salary deferrals, up to 6% of salary, now matches 25 cents on each dollar, up to a maximum of 6% of salary. The company hopes to fully restore the match in January, said Chief Administrative Officer Robert Collins, unless “something drastic happens to the economy or our business.” The plan had $127.3 million in assets as of Dec. 31, according to an SEC filing.
The Union-Tribune's matching contribution was resumed in May, after the San Diego newspaper was purchased by Platinum Equity LLC, a Beverly Hills, Calif.-based private equity firm, said Drew Schlosberg, director of community and public relations. The match had been suspended in February. Mr. Schlosberg declined to disclose the size of the 401(k) plan or the details of its match program.
Indeed, companies now seem more eager to restart their suspended matching contribution plans than they did a few months ago.