Can Your Employer Take Away Your 401 (k) Match? Sherwin-Williams Did It.

When a company suspends its 401 (K) match, this amounts to a wage reduction, some employees say. – Marketwatch Photo -Irustration/Istockphoto

For countless American employees, the 401 (K) Business match is simply a fact of life: they regularly contribute to their pension plan and in turn sponsored by the employer, the employer kicks a matching amount. According to Vanguard, the average operating contribution corresponds to 4.6% of an employee's wage.

But what if that match just disappears?

That is a reality that some employees are confronted nowadays. Recently, Sherwin -Williams SHW, the prominent Ohio -based paint manufacturer, announced that it suspended his 401 (K) match, which, according to a report from Cleveland.com, was a company contribution of 6%.

According to the report, the company, which did not respond to MarketWatch's request, blamed the switch from various economic factors. Among them: weak requirement of homes and the inflationary environment of recent years, to say nothing about President Donald Trump's rate policy.

Sherwin-Williams is not alone in this respect. Other companies have made similar phone calls to suspend their 401 (K) match, especially during turbulent financial times, such as the pandemic or financial crisis of 2008-'09.

Earlier this year, Werner Enterprises Wern, a truck company, also announced that it suspended his 401 (K) competition as part of an initiative of $ 40 million cost savings.

“Werner takes deliberate steps to streamline the activities and position the company for long -term growth. This includes difficult but necessary organizational changes,” the company said in a statement.

None of this can be reassuring for employees who are overwhelmed by such suspensions of the competition. “Many people just expect that that will continue,” says Karen Friedman, executive director of the Pension Rights Center, a non-profit organization that promotes pension security for American employees.

Those business competitions can go over time and become crucial for building a good pension nest. And that is on top of the fact that they serve as an important incentive to contribute to their 401 (K) plans in the first place, Friedman said.

But according to legal experts, it is generally in the company of a company to make changes to a 401 (K) plan in its own discretion.

Joy Napier -Joyce, a lawyer established in Baltimore who focuses primarily on the benefits of employers, told Marketwatch that there is no rule that says a company should offer a 401 (K) program. But if so, “they reserve the right to change and change the conditions and even eliminate the plan.”

If employees are a trade union that influences things to a certain extent, Napier-Joyce added. Which means that every match suspension or other changes in a 401 (K) plan are usually subject to contractual negotiations.

Another wrinkle, according to Lisa Cummings, a lawyer established in Dallas who cooperates with companies on their pension programs: if the 401 (K) is known as a Safe-Harbor plan, which means that it is exempt from certain tax rules that employers must follow in exchange for a match, there is a requirement that the company gives at least a change that the company.

However, companies can in any case look for the changes. And they often do it when the money is tight, Cummings said.

Pension benefits are often the first things to be reduced “when costs rise as a result of economic shifts,” she said.

The question, added, is whether the 401 (K) Match suspension will become a wider trend in the current workplace environment. “Employers usually do not take this drastic step unless they are confronted with very difficult economic conditions,” she said.

At the points of sale of social media, employees naturally publish frustration with every 401 (K) suspension, and say that it effectively amounts to a wage reduction. And some indicate that it can be a harbinger of worse things that are coming.

“My old company did this in [a] 2022 Deputy, and they have never re -introduced the 401K competition. There were also … waves of dismissals that took place afterwards, “said a commentator on a Reddit -Thread.

Others can of course also ask themselves whether the company updates the compensation of the executive power when the pension benefits purchase. In the case of Werner Enterprises, the company noted that its “Executive Leadership Team has taken significant reductions in their compensation packages before the 401K decision was taken.”

If there is hopeful news for those employees who see their 401 (K) company competition suspended, it is that such changes are not necessarily permanent. For example, many companies that have suspended competitions during the Pandemie, for example.

At the same time, employees can feel the pinch in other ways when it comes to their benefits. According to a new study by Mercer, a consultancy, a consultancy firm, health care costs for employers are increasing at an unprecedented rate. In 2026, the costs are expected to increase by 6.5% per employee, the highest jump since 2010.

Employees will probably bear part of that burden, according to the Mercer report. Consider higher deductible and other increased costs.

Some warn that when employers make changes to benefits, they run the risk of bringing employees to seek jobs elsewhere.

At the very least, suspending the 401 (K) match can influence how employees view their employer, Cummings said. And it also does not predict well for the financial future of the employees.

“The removal of the employer competition undermines both pension tools and the moral of the workforce,” she said.

Can your employer take away your 401 (k) match? Sherwin-Williams did it.