There are many economic issues facing the nation today. While some are
extremely important in determining how the economy is balanced, others are not.
Although this is true, that does not necessarily make these lesser important
issues obsolete. Take, for example, the recent issue of corporate leaders
matching contributors to the 401(k) plan with company stock, instead of with
cash. Though this is a relatively National issue, it still greatly affects a
large number of people in foreign areas as well as you and me. Because of this
effect on such a large number of people, it is necessary that this issue be
discussed, as will happen within the next few paragraphs.
In the way that a 401(k) stock matching plan is set up; timing is
everything. In a basic 401(k) plan employees put forth a set amount of dollars
(usually pre-determined personally by the employee) before taxes are withheld
This portion of the employee's paycheck is put toward his or her retirement.
What some companies prefer to do in order to make the 401(k) plan more
attractive for employees, is to match each employee's investment in the plan by
a certain percent. Here is where the problem comes in. Though some companies
match contributors either with cash or with a direct credit to the plan, other
companies match with corporate stock. According to Richard Sasanow, a former
assistant of public communications at Ernst and Young, "many experts consider
this to be one of the riskiest investments for a 401 (k)-but may be worth it if
you think your company has a great future." (Sasanow, 45) A recent survey shows
that 18 percent of all companies made their matching contributions this way.
Now for small, fast-growing businesses this would not seem as much of a risk
since these companies' stock are generally on the increase. But for some large
corporations, this is a great risk for employees since a lot of their
retirement money is now based on how well the company does.
Some say... [continues]
Cite This Essay
(1999, 10). 401(K) Plans. StudyMode.com. Retrieved 10, 1999, from http://www.studymode.com/essays/401K-Plans-1085.html
"401(K) Plans" StudyMode.com. 10 1999. 10 1999 <http://www.studymode.com/essays/401K-Plans-1085.html>.
"401(K) Plans." StudyMode.com. 10, 1999. Accessed 10, 1999. http://www.studymode.com/essays/401K-Plans-1085.html.