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February 27, 2007
Employers Become More Generous with 401(k) Matching

The portion of 401(k) plans with a match rate of 100 percent rose from 26 percent in 2002 to 36 percent in 2006, according to a recent study by Mercer Human Resource Consulting.

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Forty-five percent of 401(k) plans had a match rate of 50 percent in 2006, down from 53 percent of plans in 2002. Eight percent of plans offered a match rate of less than 50 percent in 2006, down slightly from 10 percent of plans in 2002. Ten percent of plans had a match rate between 51 percent and 99 percent in 2006, the same portion as in 2002.

"While a 50 percent matching contribution continues to be the most prevalent match level, the number of employers matching at 100 percent has risen steadily," says Patricia Pou, a principal with Mercer Human Resource Consulting. "This increase is consistent with the move from defined benefit pension plans to 401(k) plans."

The analysis, which looked at the benefit programs of more than 1,025 employers, indicates that the majority of organizations offer pretax retirement savings plans--90 percent sponsor either a 401 (k) or 403 (b) plan.

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