Don't Mess With Taxes

The conventional year-end wisdom is to max out your workplace defined contribution retirement plan.The argument made by many, including me in my recent year-end retirement moves post, is that you're leaving money on the 401(k) table if you're not putting in enough to at least get your employer's full matching contribution.

Well, the economy has once again turned conventional wisdom on its head.

The New York Times reports today that In Need of Cash, More Companies Cut 401(k) Match.

Thanks a lot.

Piling on: This latest assault on retirement savings comes on the heels of a stock market, in which many such retirement plans are invested, that has already eaten up a large chunk of account values.

Some folks who lost their jobs or are facing unexpected expenses have taken some or all of the money out of their tax-deferred accounts.

Now companies are pulling the plug on one of the most appealing enticements, added money that grows sans tax for years, so we're losing the value of those extra compounded earnings.

Even worse, there's nowhere to turn. With the continuing interest rate drops, "safe" alternatives such as CDs are about as appealing as a mattress. With financial institutions still shaky, the bedroom stash even edges ahead a bit.

And none of us is getting any younger. Retirement will be here in many cases long before we can comfortably afford it.

Are you affected … yet? The Times article focuses on big companies -- Federal Express, Motorola, Eastman Kodak, Ford; see a complete list of 401(k) cutting companies in this table -- but the trend is likely to spread throughout the workforce.

Did you contribute as much as you could to your 401(k) this year? Did you get a company match?

Has your employer indicated that it will be reducing or eliminating its contribution to your retirement account? If it does, will you also cut the amount you put in your 401(k)?