Recession may jeopardize 401(k) contributions

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Retirement accounts already battered by a steep market decline may get hit again as several companies suspend or reduce their 401(k) match to save cash.

Workers at General Motors Corp. and Frontier Airlines Holdings Inc., for example, could potentially lose thousands of dollars in company contributions from their retirement accounts.

GM, which recently announced it was suspending company matches for its 32,000 eligible salaried workers, said Monday its U.S. auto sales plunged 45 percent as it struggles along with competitors to survive the credit crisis and financial market turmoil.

"People know these actions are necessary to conserve cash and maintain viability," said Dan Flores, a company spokesman.

Matching contributions average about 11 percent of a company's profits, according to a recent survey of more than 1,000 companies by the Profit Sharing/401k Council of America.

Now, with the economy driving profits down, some companies are forced to cut costs and look to their 401(k) contribution as a way to eliminate millions of dollars in spending.

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