Few employers cutting 401(k) matches, PSCA survey finds

Most employers have kept their retirement plan employer contributions intact despite the economic turmoil caused by the coronavirus pandemic, according to a survey by the Plan Sponsor Council of America.

Nearly 90% of plan sponsors reported that they made no change to employer contributions, with only 2.9% considering suspending or reducing them. Five percent moved to suspend matching contributions and less than 1% reduced them.

"Employers, doubtless helped by support from the Payroll Protection Program, are responding to current conditions by largely staying the course," PSCA research director Hattie Greenan said in a news release.

Among large firms with more than 5,000 employees, however, suspensions were higher, with 11.6% pausing their matches.

Though most plan sponsors left their contributions untouched, they did move to implement at least one of the optional expanded loan or withdrawal provisions under the CARES Act. Nearly two-thirds (63.5%) allowed participants to take coronavirus-related distributions from their 401(k) accounts and 36.5% increased plan loan amounts to the lesser of $100,000 or 100% of the vested balance. Fewer than 1 in 10 employers (8.8%) said they would not implement any of the CARES Act provisions.

Participants, meanwhile, displayed tepid interest in pulling money from their retirement accounts. Among plan sponsors offering CRDs, nearly 40% said that an average of only 1% to 5% of participants took one. Among sponsors that increased the loan limits, more than half reported that less than 1% of participants took advantage of the option.

The survey was based on responses received from 137 401(k) plan sponsors from June 2-16.