In a sign of economic recovery, more companies are restoring the matching contribution to their 401(k) plans, after suspending them last year to save cash-flow and jobs, according to a study reported by Hewitt Associates and reported by the Washington Post.

The study showed that 80 percent of companies that suspended or reduced their matches in 2009 say they are planning to restore it this year. Many companies found that while the suspension reduced costs, it also had the adverse effect of reducing employee participation in the plan. No matching contribution meant that employees did not have as much incentive to participate. Worries that their employees aren’t saving enough for retirement may be part of the reason why companies are restoring the match.

Employers are also looking at other ways to improve plan participation, including automatic portfolio rebalancing, where the participant’s asset allocation is rebalanced on a regular basis, and automatic contribution escalation, where the employee can opt to have their contribution rates automatically increase over time.

NADART offers a number of products and tools to help employers increase employee participation rates, including automatic enrollment (with automatic contribution escalation), online calculators, and communication materials. If you’d like to learn more about NADART’s retirement services, please contact a NADART Representative at (800) 462-3278, ext. 7161 or e-mail nadart401k@nada.org.