How to Respond to a Cut in 401k Matching

Many companies have made a cut in their 401k matching in recent years. When this happens to you, you need to make sure that you respond properly. Here are a few things to consider about responding to a cut in 401k matching.

Avoid Harsh Decisions

When a company cuts out 401k matching, many employees think about making a quick decision to roll their funds into some other type of retirement account such as an IRA. However, in most cases, this is not going to be possible and it would not help you even if it was. In order to move your funds from a company 401k, you are going to have to leave your job. Putting your money into a different type of account would not give you more money to invest anyway.

Make up the Difference

When your company cuts out 401k matching, you might want to consider making up the difference with your contributions. If you have not met the maximum annual contribution, you should increase your contribution to make up for the lack of matching. If you have already maxed out your annual contribution, you might think about making up the difference by depositing money into an IRA.

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