The stock market has rebounded nicely, yet there's still more good news when it comes to 401(k)s. Most of the companies that suspended their matching contributions as the economy tanked have either restored the match, or plan to within the next six months.

A company match is the amount an employer contributes to a worker's retirement account. The most common employer match is 50 cents on the dollar up to 6 percent of a worker's pay.

The move to restore matches is important because they're one of the most significant factors behind workers saving for retirement.

Matching contributions for large companies average about 11 percent of profits, according to the Profit Sharing/401k Council of America, a nonprofit industry group. That means corporate America spends millions a year on employee retirement fund matches. When times get tough and profitability falls, as happened in 2008, many companies begin to conserve cash and cut costs including the 401(k) match.

Nearly 15 percent of the 400 companies surveyed in October by the 401(k) Council suspended their matching program within the last three years. Among them: Black & Decker Corp. and General Motors Corp. However, more than 9 percent increased their contributions or started a company match in the past three years.

Of those that suspended their matches, 39 percent have already restored their contributions. Black & Decker, for example, restored its match last December. General Motors reinstated its match in October 2009. Another 38 percent plan to restore their match in the next six months, bringing the total to 77 percent.

Another 4.4 percent reduced the amount of their match and employees still receive lower contributions. Another 1.2 percent of companies that reduced their match, have since restored it to prior levels.

The 401(k) Council study shows that when companies suspended the match, many workers stopped contributing, too. About 78 percent of companies that continue to suspend their matching contributions said they saw a decrease in worker participation.

Halting or curtailing contributions can be a problem for a work force that relies mostly on saving a portion of their own money for retirement.

There's no doubt 401(k) savings accounts are riskier for workers than the pensions once provided by companies. Not only are the person's contributions optional, but a company match is discretionary and often tied to profitability, said Pam Hess, director of retirement research for Aon Hewitt, a human resources consultant.

"It's going to take education to make people understand that the 401(k) is it. That's all they have," Hess said. "Their 401(k) needs to fund the bulk of their retirement someday."

It's difficult to determine whether workers stop contributing as a direct result of companies cutting their match, Hess said. Workers may simply be diverting retirement savings to paying bills or reducing debt as the economic downturn affects their family finances.

Given the shaky economy over the last few years, some cases employees concerned about layoffs may be reducing or stopping their contributions to save money in an emergency fund.

Changes made to matching contributions 2008-2010

Change

Percent of companies

Reduced match, still reduced

4.4

Reduced match, since restored

1.2

Suspended match, still suspended

9.0

Suspended match, since restored

5.8

Increased or began a match

9.2

No change in match

70.4

Based on responses from 412 companies that offered matching contributions as of Dec. 31, 2007.

Source: Profit Sharing/401k Council of America, Dec. 2010