AOL, IBM and 8% of American companies move to annual match for 401k

[Anonymous]

Anybody stuck with this situation? AOL chief made $12 mil last year but doesn't want employees to receive regular matches. Just another move to leave employees with no means to plan well for retirement while CEOs loot the company.

[Anonymous]

can you post a link to an article, OP?

[Anonymous]

Not with AOL, but that is how several of the companies my husband has worked for and you have to stay several years in order to keep the money. Its pretty normal.

[Anonymous]

Anonymous wrote:Not with AOL, but that is how several of the companies my husband has worked for and you have to stay several years in order to keep the money. Its pretty normal.

Vesting is a different issue.

[Anonymous]

Front page of today's Post
http://www.washingtonpost.com/business/economy/aol-chief-ignites-firestorm-over-401k-cuts-and-distressed-babies-remark/2014/02/07/2116c03a-9012-11e3-b227-12a45d109e03_story.html

This will decrease mobility since you have to be on board at 12/31 to qualify and on board in the next FY when they pay (presumably in first quarter but I didn't see where AOL committed to that)-then if you move you will not get credit for time at AOL and won't have time at the new employer. Just a really cynical way to treat people. The reasons given for the nove are over the top.

[Anonymous]

Tim Armstrong of AOL is selfish and stringy!

[Anonymous]

That was the deal when I worked for a large federal contractor a few years back. They paid the match on dec. 31 for the whole year. I left the job in early dec. and was SOL on the match for that year. It was pretty stingy, as were the raises/bonus. I'm glad I left.

[Anonymous]

Most people do not have access to a 401k. The majory of businesses in the country do not offer it. The ones that do(mostly larger companies) will require a vesting time, have a waiting period to enroll, charge high fees, and now this. The average 401k has like 25k in it. It is a failed program. It will be a scary retirement for many. But not Tim Archstrong, he should be okay.

[Anonymous]

Anonymous wrote:Most people do not have access to a 401k. The majory of businesses in the country do not offer it. The ones that do(mostly larger companies) will require a vesting time, have a waiting period to enroll, charge high fees, and now this. The average 401k has like 25k in it. It is a failed program. It will be a scary retirement for many. But not Tim Archstrong, he should be okay.

It may be a failed program, but it is the only program since most Americans do not have pensions. How will millennials retire?

[Anonymous]

I worked in HR or a copany that did this, plus they awarded a full year's vacation Dec 31. They couldn't understand why so many people quit Jan 2.

[Anonymous]

I hope AOL's board docks Tim Armstrong's pay for the reputation damage he's done to his company's brand this week.

There's a lot more to this story. Yes, they moved from matching 401k contributions as they are made (which 92% of companies do) and switched to making a lump-sum, once-a-year match for employees still employed on Dec. 31. The negative effect of this is twofold:

1) The employee lose the benefit of dollar-cost averaging on the match (but not their own contributions)
2) If you leave the company for any reason, you forego that year's cumulative match.

Armstrong was really despicable though. First he blamed th Affordable Care Act, saying it was a $7 million expense (as if this is material for a company with $2.4 billion in revenues and $996 million in profits, that happens to pay him an exorbitant sum). Then, he literally blamed it on the "distressed babies" of exactly two babies of AOL employees. So basically he told AOL's employees to suck it up because two employees had babies born with special needs.

Again, if I was on that board, I'd be all, "what the fuck, dude?"

[Anonymous]

Anonymous wrote:

Anonymous wrote:Most people do not have access to a 401k. The majory of businesses in the country do not offer it. The ones that do(mostly larger companies) will require a vesting time, have a waiting period to enroll, charge high fees, and now this. The average 401k has like 25k in it. It is a failed program. It will be a scary retirement for many. But not Tim Archstrong, he should be okay.

It may be a failed program, but it is the only program since most Americans do not have pensions. How will millennials retire?

Most companies don't offer pensions because they could offer 401k plans in their place.

Don't forget that a "retirement" is a relatively new concept.

[Anonymous]

Here is a really good story about 401k plans, and how they came to be:

http://www.bloomberg.com/news/2014-02-03/you-can-thank-or-blame-richard-stanger-for-writing-401-k-.html

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Most people do not have access to a 401k. The majory of businesses in the country do not offer it. The ones that do(mostly larger companies) will require a vesting time, have a waiting period to enroll, charge high fees, and now this. The average 401k has like 25k in it. It is a failed program. It will be a scary retirement for many. But not Tim Archstrong, he should be okay.

It may be a failed program, but it is the only program since most Americans do not have pensions. How will millennials retire?

Most companies don't offer pensions because they could offer 401k plans in their place.

Don't forget that a "retirement" is a relatively new concept.

Fair enough but it benefits the next generation by opening jobs and frankly gets people out of the workforce who need to move on. Plus the concept is not that new.

[Anonymous]

Anonymous wrote:I hope AOL's board docks Tim Armstrong's pay for the reputation damage he's done to his company's brand this week.

There's a lot more to this story. Yes, they moved from matching 401k contributions as they are made (which 92% of companies do) and switched to making a lump-sum, once-a-year match for employees still employed on Dec. 31. The negative effect of this is twofold:

1) The employee lose the benefit of dollar-cost averaging on the match (but not their own contributions)
2) If you leave the company for any reason, you forego that year's cumulative match.

Armstrong was really despicable though. First he blamed th Affordable Care Act, saying it was a $7 million expense (as if this is material for a company with $2.4 billion in revenues and $996 million in profits, that happens to pay him an exorbitant sum). Then, he literally blamed it on the "distressed babies" of exactly two babies of AOL employees. So basically he told AOL's employees to suck it up because two employees had babies born with special needs.

Again, if I was on that board, I'd be all, "what the fuck, dude?"

I hope they fire him. Why is it that mini Putins rule corporate America and we put up with it?