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Related: About this forumAOL is leading the way to make 401(k)s worse for everyone
This is really disgraceful. Workers are urged to save, but AOL, by delaying the matching funds until the end of the year, essentially cheats its own employees.
AOL is leading the way to make 401(k)s worse for everyone
By Jia Lynn Yang February 4 at 1:23 pm
In our imperfect 401(k) system, there's one critical perk that many employees appreciate and count on: companies matching some part of their retirement savings every paycheck.
So when IBM changed its 401(k) system in 2012 to hand out employee matches in one lump sum at the end of the year, there was an uproar. Those who left the company before Dec. 15 would not see any matched dollars unless they were retiring. And employees would also miss out on all the compounding throughout the year from the contributions. ... Retirement experts warned that with IBM setting the example, other companies would follow suit. ... Sure enough, this year another major firm is making the change: AOL.
The tweak was subtle, buried in the company's summary of its 2014 benefits, and it's arguably even worse than the IBM change. ... In order to receive the company match, the employee must be "active" on Dec. 31, 2014. In addition, the contribution will be allocated as a "one time lump sum after the end of the Plan Year." ... In other words, employees will have to stay through the end of the year to get the match, and then the contribution won't even come during 2014. In a year like last year, where the stock market was roaring, the difference for an employee who left in December could amount to thousands of dollars in pay and added savings.
An AOL spokesperson declined to comment for this story.
I'll bet they declined to comment.
401(k) plans are regulated by the Department of Labor's Employee Benefits Security Administration.
This is their contact page: Consumer Assistance.
But don't stop there. Go right to the top: EBSA Organization Chart
Printer-friendly version of EBSA organization chart
Assistant Secretary
Phyllis C. Borzi was confirmed on July 10, 2009 as Assistant Secretary of Labor of the Employee Benefits Security Administration (EBSA). EBSA oversees approximately 707,000 private-sector retirement plans, approximately 2.3 million health plans, and a similar number of other welfare benefit plans that provide benefits to approximately 141 million Americans. As agency head, she oversees the administration, regulation and enforcement of Title I of the Employee Retirement Income Security Act of 1974 (ERISA).
Previously, Ms. Borzi was a research professor in the Department of Health Policy at George Washington University Medical Centers School of Public Health and Health Services. In that position, she was involved in research and policy analysis involving employee benefit plans, the uninsured, managed care, and legal barriers to the development of health information technology. In addition, she was of counsel with the Washington, D.C. law firm of ODonoghue & ODonoghue LLP, specializing in ERISA and other legal issues affecting employee benefit plans, including pensions and retirement savings, health plans, and discrimination based on age or disability.
From 1979 to 1995, Borzi served as pension and employee benefit counsel for the U.S. House of Representatives, Subcommittee on Labor-Management Relations of the Committee on Education and Labor. In 1993, she served on working groups dealing with insurance reform, workers compensation and employer coverage in connection with the Clinton Task Force on Health Care Reform.
....
Assistant Secretary
Phyllis C. Borzi
200 Constitution Ave, NW, Ste S-2524
Washington, DC 20210
Tel (202) 693-8300
Fax (202) 219-5526
{snip information about other staff members}
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AOL is leading the way to make 401(k)s worse for everyone (Original Post)
mahatmakanejeeves
Feb 2014
OP
AOL chief ignites firestorm over 401(k) cuts and ‘distressed babies’ remark
mahatmakanejeeves
Feb 2014
#2
AOL chief reverses changes to 401(k) policy after a week of bad publicity
mahatmakanejeeves
Feb 2014
#3
westerebus
(2,976 posts)1. Wait until the President hears about this!
mahatmakanejeeves
(57,446 posts)2. AOL chief ignites firestorm over 401(k) cuts and ‘distressed babies’ remark
AOL chief ignites firestorm over 401(k) cuts and distressed babies remark
First comment:
Backlash over AOLs 401(k) cuts and rationale
By Jia Lynn Yang, Published: February 7
....
The strange turn of events began Tuesday, when employees began learning that AOL was switching its 401(k) match to an annual lump sum, rather than distributing the money throughout the year with every paycheck as it had done before. Only employees who remain at the company through Dec. 31 are eligible, meaning that anyone who leaves midyear wont see any of the pay.
....
The changes undercut a central virtue of the 401(k) system, which in theory should make it easier for employees to switch companies and take their savings with them. Instead, with people changing jobs more frequently during the course of their careers, the loss in matches can add up to thousands of dollars each time a worker switches employers.
Over a longer time horizon, youre missing out on a huge percentage of all the appreciation if your money is not in the market, said Mike Alfred, chief executive of BrightScope, which independently rates the quality of 401(k) plans.
Many at AOL did not know about the companys new 401(k) policy until it was reported by The Washington Post this week. At first, after The Post report, Armstrong blamed the change on the new health-care law during an interview with CNBC. Then, on a conference call with employees, he added another reason: two workers had distressed babies in 2012, each costing the company $1 million.
First comment:
Offshore wind wrote: 2/7/2014 9:47 PM EST
Dirtbag practice. I pay my match every month. We are all in the game, together. And I am a fiscally conservative person who leans right on those matters. This is just theft.
mahatmakanejeeves
(57,446 posts)3. AOL chief reverses changes to 401(k) policy after a week of bad publicity
antigop
(12,778 posts)4. nope, it was IBM who led the way
http://www.forbes.com/sites/helaineolen/2012/12/10/ibm-makes-changes-to-its-401k-plan/
AOL relented. IBM did not.
When it comes to pension and 401(k) plans, IBM has long been a trendsetter. Thats a worrisome fact in view of the companys recent controversial change to their employee retirement plan.
As of January 1, 2013, IBM will no longer give employees their 401(k) match with each pay cycle. Instead, the technology behemoth will make one large lump-sum payment to employee accounts on December 31 of each year.
The motivation? Most independent observers say we should follow the money IBMs money, that is.
As of January 1, 2013, IBM will no longer give employees their 401(k) match with each pay cycle. Instead, the technology behemoth will make one large lump-sum payment to employee accounts on December 31 of each year.
The motivation? Most independent observers say we should follow the money IBMs money, that is.
AOL relented. IBM did not.
bemildred
(90,061 posts)5. 401Ks were always a sop to the banks, something we got instead of defined benefit plans. nt