The employer 401(k) match is back

By Gerri Willis, personal finance editor


NEW YORK (CNN) -- According to a new survey from Hewitt Associates, 80% of employers that suspended or reduced their company match in 2009 plan to restore it in 2010.

The survey also showed that half of the employers that do not already offer automatic rebalancing are "very or somewhat likely" to add it to their plan this year.. Automatic rebalancing simply resets your portfolio when one type of investment shoots up in value so that you maintain the mix of investments appropriate to your age.

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And nearly four in 10 are "very or somewhat likely" to add automatic contribution escalation -- that's simply making your contributions automatically rise when your pay does.

It's always important to continue contributing to your retirement fund. Most of us are underprepared for retirement. The median balance in a 401(k) plan for folks with a history of investing was less than $45,000 and the median for all of us was less than $13,000. In other words, we've got a long way to go whether or not our employer stopped contributing.

Of those who do have a 401(k) plan at work, only 75% contribute to the plan. If you're not already investing -- ask yourself -- what's holding you back? You're missing out on free money.

If you're already making contributions, keep investing. Even if your employer isn't one of those who recently reinstated their match, you'll still want to keep putting money away for retirement. In fact, in that case, you'd want to set even more money aside

And get diversified! Keep in mind that 401(k) investing doesn't just mean stock investing. It means a balanced portfolio of stocks, bonds, commodities and even real estate. You need to pursue a diversified approach. - What are some bad ideas when it comes to 401(k) investing?

Do not tap your 401(k) for non-emergencies!

The cost of using your retirement money before retirement is excessive. If you're less than 59.5 years old -- and you take a hardship withdrawal -- you'll pay a 10% penalty, plus you'll pay income tax on what you took out. If you take out a loan against your 401(k) and you lose your job, you'll have to pay the entire loan back AND you'll be on the hook for the 10% penalty if you're less than 59.5 years old.

And don't leave your 401(k) behind! If you're laid off or leave the company for any reason, it makes sense to roll your money over to an IRA. Not only are you likely to have more investment options, but you'll also have more control over your money. Remember, 401(k) loans are only available to those who are actively employed.

Talkback: Do you get an employer match for your 401(k)? To top of page

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