Employers restore 401(k) matching funds

Golden eggs in a nest

Yippee! The money is back!

A new analysis from consulting firm Towers Watson found that 75% of employers that stopped providing matching retirement fund dollars during the recession have reinstated the fund match.

New York-based Towers Watson first considered retirement fund matches in 2009, as part of a study on businesses' responses to the recession. It looked at firms from a wide variety of industries, including automotive, health care, technology and manufacturing.

The study found that 231 firms had stopped matching retirement funds and 29 were still matching, but in smaller amounts.

The more recent survey contacted 205 of the firms that had stopped matching employees' 401(k) plan contributions. Three-quarters had reinstated the match, though about 20% of these had reduced the amount.

A few increased the benefit.

Of the 29 companies that had earlier decreased the benefit, about one-third returned to their previous matching levels, the survey found.

If you're one of the workers whose employer has reinstated -- or never removed -- a matching fund benefit, get busy!

Our 401(k) calculator can help you get started. It will show you how the savings can pile up over your career.

A business that offers to match your retirement savings is offering you free money, and you should take full advantage of that generosity. Fund your 401(k) to at least the highest level your employer will match.

Doing so can have significant benefits by the time you reach retirement.

Consider a simple example in which you are 30 years away from retirement and work for a company that will match the first $6,000 you put into your 401(k) account every year.

If you save $2,000 a year, your company will add another $2,000. Invest the annual $4,000 at 6% for 30 years and you'll have $358,180

Save $6,000 a year, though, and your company will add another $6,000. Invest that $12,000 annually at 6% for 30 years and you'll have $1,074,542.

Your extra savings, plus your employer's match, triples your retirement savings.

Without that match, your annual $6,000 at 6% gives you $537,271.01 -- a pretty big difference.

Your employer is offering you a 100% return on the 401(k) savings it matches.

After paying your bills, funding your retirement account to at least the match level should be your top financial priority. Where else, after all, can you find a 100% return?

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