401k employer matches being suspended

[Russell]

Lots of companies are suspending the 401k match, including my company.

I guess it would depend on your current tax rate vs. when you retire but does this make ROTH a more attractive option in this economy? The advantage I see is if push comes to shove you can take out your contributions tax free (penalty free too?).

[boosami]

It's quite the opposite for me. My employer just raised their match rate for 2009. It went from dollar-for-dollar 5% to 6%, and is immediately vested.

[Russell]

Wow, that's good to hear.

As part of cost cutting initiatives and to minimize the layoffs many employers are instituting merit freeze, 401k match suspension and even 10-15% mandatory pay cuts.

[sweeps]

if push comes to shove you can take out your contributions tax free (penalty free too?).

This could be viewed as a negative too.

The 401k vs Roth debate depends on personal circumstances and personal preferences. I prefer a 401k because I like to take my tax deductions now while the government is offering them. I reject the predictions that tax rates will be much higher in the future.

[simpletron]

it still depends on current vs future tax rates, but removes the automatic bye for the first dollars into 401K because of the match. aka the saying first 401K up to match doesn't applied.

my company has increased the 401K match, but decreased who gets profit sharing. I don't know if that was good or bad for me. this was the first year, I got profit sharing and won't get it next year, unless I get two promotions. profit-sharing was smaller than the increase in the match, but it might just be due to the lower profits this year.

[pearlieq]

As others have said, so many factors play into the decision.

My company is one of those that cut the match this year. We chose to keep making my contributions for a few different reasons.

1.) We fully fund both the 401k and Roth IRAs, so it isn't an either-or choice for us.
2.) As DINKs, the 401k is one of the few tax breaks available to us.
3.) We view it as a way to hedge our bets. The odds of us making it another 30 years without some politician monkeying around with the terms of at least one of our retirement accounts seems slim. We figure pursuing many different avenues of savings leaves us with the best chance of coming out intact.

[Goldy1]

We have doen both 401K and roth but 401K has been the first place to go even tho no employer match. You still get the tax deduction.

If they start taxing roth distributions there will be some unhappy folk, but it seems they'd come up with some way to make it go down easier. lol like attatch it to a bill or something
Health care contributions have gone up and the plans have higher deductables.
take care of yourself I guess. (and dont' age; lol it makes insurance go up no matter your health)

[feh]

Same thing here - my employer ceased 401K matching for 2009 and froze salaries. They also laid off 190 people (about 3% of the workforce).

I'm not happy about it, but grateful I still have my job.

[cptacek]

I reject the predictions that tax rates will be much higher in the future.

Why? ...