Companies have begun suspending planned matching contributions to their defined contribution plans as a result of the COVID-19 pandemic, filings show, with more expected to follow suit in the coming weeks.
La-Z-Boy Inc., Monroe, Mich.; Bassett Furniture Industries, Bassett, Va.; flooring company Interface Inc., Atlanta; and technology company Sabre Corp., Southlake, Texas, have each announced suspensions of employer contributions to DC plans in recent days.
"We are prepared to do what it takes to weather the crisis and to successfully emerge with our Bassett teammates on the other side of this difficult period of time," said Rob Spilman, chairman and CEO of Bassett, in the company's 8-K filing Thursday with the Securities and Exchange Commission.
The moves aren't surprising, industry experts said.
"The idea is that because it's pretty clear there's going to be a rocky road ahead, employers and plan sponsors are trying to cut off any spending that they absolutely don't have to make right now and see where things develop and then revisit as the path forward starts to clear," said Joy M. Napier-Joyce, an employee benefits attorney at Jackson Lewis PC.
In response to the 2008 financial crisis, 13% of companies with at least 1,000 employees suspended 401(k) contributions and another 5% reduced contributions, according to a 2010 survey from Willis Towers Watson.
Because many plan sponsors faced similar decisions in 2008 and 2009, there's less reluctance in 2020 to suspend contributions in the midst of a financial crisis, Ms. Napier-Joyce said.
Sponsors "find that the fiscally prudent thing to do is suspend contributions until the future is a little bit more clear and repurpose those dollars to help solve other cash-flow issues," she said.