Grab Your Reinstated 401(k) Match Post-Haste

(MoneyWatch)  Many employers who eliminated 401(k) matching funds during the recession have reinstated them or plan to do so in the year ahead. If you reduced or halted your 401(k) contributions for that reason, you may soon get notice from HR that your match is back, if you haven't already -- and you should act upon the renewed opportunity.

A quarter of the companies that dropped their match have reintroduced them or intend to in 2010, according to a Fidelity Investments report released today. Fidelity found an even higher level of actual or planned reinstatements -- 44% -- among the corporate 401(k) plans with more than 5,000 participants that it manages.

Fidelity's study comes on the heels of another by Watson Wyatt that found, of firms that cut their match, 35% intend to reverse that decision in the next six months vs. just 5% in June. The reason: Employers are growing concerned about keeping existing workers and attracting new ones when the labor-market recovery gets underway, which could begin some time next year.

Company matches are the carrot employers use to encourage workers to participate in their 401(k) plans. Employees who don't take advantage of them, as the expression goes, are leaving free money on the table.

In cutting matching funds, companies gave employees an excuse to halt their contributions, especially lower-paid workers on tight budgets for whom even a slight bump in take-home pay is invaluable. Those who did suffered a double-whammy: Along with cutting off their retirement-savings funding stream, they reduced investment funds that might have bought mutual-fund shares or their own company's stock at reduced prices during the stock market's downturn.

In fact, Fidelity reported today the average 401(k) account balance rose in the third quarter almost 13% to $60,700 -- and was up 28% from six months earlier.

The 401(k) retirement-savings system is far from ideal, but it remains the primary retirement-savings vehicles for most of us. If you're not taking full advantage of your company's match, now or when it's reinstated, you're depriving yourself of one of the best employee benefits available.