FedEx Corp., Memphis, Tenn., plans to close its U.S. defined benefit plan to new hires effective Jan. 1 and increase the company match in its 401(k) plan a year later.
Employees hired or rehired after Jan. 1 will be automatically enrolled into the 401(k) plan, which will have "enhanced" benefits effective Jan. 1, 2021, spokeswoman Bonny Harrison said in an email.
The enhanced 401(k) plan will provide a FedEx contribution of 8%, up from 3.5%, if the employee contributes 6% of his or her salary, Ms. Harrison said. Employees hired in 2020 will be automatically enrolled in the 401(k) plan with the current match, and will then receive the enhanced benefit beginning in 2021 along with new hires going forward.
Current employees will have the choice of staying in the DB plan and the current 3.5% match in the 401(k) plan or accept the enhanced benefits of the 401(k) plan. Ms. Harrison said retirees are not being affected, and that offer will be made to all U.S. employees.
As of May 31, U.S. defined benefit plan assets totaled $22.3 billion, while projected benefit obligations totaled $26.6 billion, for a funding ratio of 83.8%, according to the company's most recent 10-K filing. The FedEx Corp. Retirement Savings Plan had $17.1 billion in assets, as of May 31, according to the company's most recent Form 5500 filing.