BOSTON – The Mass. Securities Division is calling on 401(k) plan administrators to report how many companies have shifted to a lump-sum matching contribution once a year, a change that can undermine worker savings, Bloomberg News reported last week.
The unit sent a letter to the 25 largest providers of 401(k) plans, requesting the number of employers who pay distributions at year-end, when the move was made from more frequent payroll periods, and what workers are told about the potential consequences, the division said in a statement.
“At a time when most Americans have much of their retirement savings in these 401(k) plans, it is crucial that they are made aware of the risks involved when a company shifts to a year-end distribution,” William F. Galvin, Massachusetts secretary of the commonwealth and chief securities regulator, said in the statement.
Companies across industries are squeezing 401(k) contributions by holding back on the amount and timing of their matching funds, making it harder for U.S. workers to save for retirement, Bloomberg reported. •