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IBM Cuts Back on 401(k) Contributions

Posted by Frank Steinberg | Dec 07, 2012 | 0 Comments

There's a story in today's Wall Street Journal that discusses the decision of IBM to make 401(k) matching contributions just once per year, on December 31. 

Starting next year, IBM's contributions, which generally range from 6% to 10% of pay, will take place Dec. 31. Workers who leave the company before Dec. 15 won't qualify for the match, unless they retire.  (Emphasis ours.)

There are a lot of implications in this decision.  Want to quit before December 15?  There goes your matching contribution.  Get laid off in a reorgainzation before December 15?  No match.  Get terminated for performance reasons?  Same thing.  The only way that you qualify, apparently, for the match if you leave before December 15 is to retire.

There are practical implications for departing employees and their attorneys: damages calculations in lawsuits will be affected, as will severance negotiations.

It will be interesting to see whether other companies follow IBM's lead on this. 

About the Author

Frank Steinberg

Frank is the founder and principal of Steinberg Law, LLC. A Jersey boy born and bred, he focuses on employment litigation and counseling, business litigation,  and aviation law. Following law school and a clerkship in the federal district court Frank spent his early career with large litigation ...

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