Could the beloved 401(k) match be next on the benefits chopping block?
That looks to be the case for at least one technology services and outsourcing firm. TTEC recently paused 401(k) matches for its US-based employees, Business Insider reported on May 8. The company, which is headquartered in Austin, has about 16,000 staff in the US.
TTEC’s chief people officer, Laura Butler, said in an April 30 memo that the pause would last nine months, and that the company hopes to resume its 3% match “if our business performance supports it.”
Employers often make changes to their retirement plan contributions during periods of economic strain or uncertainty, sources told HR Brew. And while many ultimately resume their match, they don’t always do so at the same level.
What prompts employers to hit pause on 401(k) matches? More than three-quarters (76%) of employers offered a Roth 401(k) or other similar defined contribution plan as of 2025, according to SHRM. Of those offering a defined contribution plan, 74% also offered a match.
Despite their popularity, 401(k) matches often take a hit when the economy goes south. TTEC is far from the first employer to hit pause on their retirement match. The paint manufacturer Sherwin-Williams did so last year, as did Drexel University, though both resumed them within the year.
Pauses to 401(k) matching ticked up during the 2001 and 2008 recessions, as well as the first months of the Covid-19 pandemic.
Retirement tends to be one of the biggest lines on companies’ benefit budgets, after healthcare. Employers may favor making cuts to their 401(k) programs if it means they don’t have to lay off workers, Craig Copeland, the director of wealth benefits research with the Employee Benefits Research Institute, said. During periods of economic strain, “one of the things that employers have gone to instead of laying off people, is cut back on its benefits,” he said. If a company matches employee 401(k) contributions at 5%, “that potentially could make a difference,” and allow them to avoid job cuts, he said.
There are other incremental measures HR leaders may consider taking before pausing their 401(k) match, Vin Smith, a partner with the investment consulting firm Fiducient Advisors, told HR Brew last year. Changing vesting schedules or making contributions less frequently, for example, might “soften the blow from an employee morale perspective,” he said.
Helping workers stay the course. Many employers do eventually resume 401(k) matching, research suggests. But it may not be as generous. Resuming 401(k) matches can have both financial and compliance implications for companies, Smith and Copeland told us. An employer may have to perform nondiscrimination testing, for example, to ensure the plan doesn’t favor highly-paid employees over non-highly paid ones when an employer starts making contributions again.
Amid pauses or reductions, HR teams should remind workers that they can and should continue to contribute their retirement accounts, even if their employer can’t, Copeland said.
Reduced employer contributions “can have a long-term effect on employees.” HR’s message to workers, Copeland said, should be, “you should try to sustain those and then when we bring it back, you won’t be behind on your part.”
This report was originally published by HR Brew.
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