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Companies look to cut 401(k) contributions

More corporations are looking to temporarily halt 401(k) contributions, trying to cut costs as the coronavirus crisis hits their revenues and profits, labor attorneys say.

It’s another way companies are trying to contain mounting losses, along with millions of layoffs and employee furloughs. For workers, those moves are putting a big dent in family budgets and retirement plans, which are already battered by the stock market’s plunge.

Joy Napier-Joy, head of the employee-benefits practice at the law firm Jackson Lewis P.C., said calls about canceling 401(k) matching ramped up over the past two weeks. 

“In anticipation of an economic downturn, employers are looking at the ability to suspend those contributions for this year, or the near future, to help with expenses,” Joyce said. 

A 401(k) plan is a retirement option offered by employers, which gives employees a tax break on money they set aside for their nest egg. 

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Depending on the employer’s 401(k) plan, contributions made to retirement savings could be matched by employer contributions. Typically, employers match a percentage of an employee’s contributions, up to a certain portion of their salary.

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