Contribute to 401(k) in tough times
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Tech Data made good on its promise and reinstated the match early in 2003. But while it was suspended, the company encouraged employees to continue their contributions.

"We certainly have the position that the 401(k) is a good financial decision for all of us whether there's a match or not. We have a third-party administrator who we bring in every year to answer basic questions. They gave the group the same general message about the strength of contributing," Francis says.

Reasons for cutting the match
Like Tech Data, which said it suspended its match to save jobs, companies that cut the match say they rarely do it without good reason.

Rich Koski calls it a "gut-wrenching" decision.

"A lot of companies view it as breaking an implicit contract with their employees, especially when they don't have a defined benefit plan and everything is in the 401(k)."

Some companies, such as Ford, have generous defined benefit plans and are obligated to fund them. When times are tough, the voluntary match on the 401(k) is sacrificed in favor of the mandatory pension plan contributions.

The rising cost of health benefits is another reason some companies drop the match. It's also a reason some employees stop contributing.

"Many companies are having to increase the co-pays in health programs. Employees have to spend a larger portion of their income to keep their health insurance. That's a higher priority. There's competition across benefit programs at the employer level and there's the same competition at employee levels," according to Dallas Salisbury of the Employee Benefits Research Institute.

Apparently, some financial planners encourage their clients to only contribute sufficient dollars to capture the match. The theory is that the employee should invest any additional money in an IRA, which could give the employee greater investment flexibility. That could encourage employees, whose match is suspended, to stop contributions.

Chris Cooper advises workers to be wary of that kind of advice; the planner may be thinking more about the commission he or she will get for selling an IRA. He advises maxing out your 401(k) contributions before funding an IRA.

If you want to save as much as possible for retirement, keep socking money away in the 401(k), regardless of the economy or whether you get a company match. Presumably, your contribution is buying a greater number of shares when share prices are low. That will pay off when the economy comes out of its slump and fund prices rise.

If you really can't stand seeing the bottom line decline quarter after quarter, consider putting a greater portion of new contributions into more conservative investments such as money markets. Bonds can be risky right now because their share prices may be close to peaking.

Unless you're independently wealthy or have some other options to fund your retirement, you'll need a fat 401(k). Pretax contributions are the fastest route to building that kind of wealth.