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Tags: finance, ira, survive a 401k match suspension
 In the current economic situation most companies have found that reducing and even suspending 401k matches as the way to go in terms of saving on costs. This is especially true when their bottom line is under pressure. Because they can save upwards to millions on this cost-cutting method companies have used this strategy, much to the dismay of their employees.
This is because most employees signed up for the 401k retirement plan because of their company’s matching contribution. However, even if your company suspends its 401k contribution, you will still be retiring, and that is one fact that cannot be disputed. But just because your company has suspended contributions does not necessarily mean the end of the road for your plans.
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You can survive a 401k match suspension; all it needs is some financial planning on your part. Try and look into other tax-deferred investment instruments that can help offset the loss of your company’s contribution matching. An individual retirement account or IRA may be one possibility. You have two options when it comes to IRAs—the traditional IRA and the Roth IRA.
In a traditional IRA contributions are tax deductible but you'll pay ordinary taxes when you take distributions at retirement. A Roth IRA on the other hand, is taken from after-tax contributions so distributions are tax free. And just because there’s no employer match doesn’t mean the plan is not there anymore.
Some financial experts contend that since a 401k fund is based on what’s going on in the stock market, you’re actually going to be losing money because of the current financial downtrend. Still others argue that you should continue your funding since it is still an investment and that just because the market is down right doesn’t mean it won’t bounce back.
At the same time they maintain that many cutbacks are temporary and that companies will reinstate contribution matching once everything returns to some semblance of normalcy since companies know having a 401k matching is a big incentive for workers. Be that as it may, if you are still questioning yourself as to whether or not you should continue putting money into your 401k despite there being no company matching you should know what your other saving options will be.
At the same time you should also know what tax implications there are if you stop putting money into the plan. And since this is for your retirement look at how all this will change your goals and plans. You may need to do some catch-up through some other retirement vehicle in order to make up for the loss.
If you are not savvy enough, end even if you are, I recommend talking it over with a financial consultant who can go over your options with you. That way you won’t lose out on a lot and still be on track to having a golden nest egg to use in the future.
About the author
The author of this article Rick Goldfeller is a successful underground Financial Analyst who has been advising and coaching individuals for many years. Rick recently published a book on how to manage your money and attract Wealth and Financial Freedom. More info on his Finance Planning course is available HERE.
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