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Benefits December 23, 2008
Starbucks to Exercise Discretion in 401(k) Matching
December 23, 2008 (PLANSPONSOR.com) - Giant coffee
retailer Starbucks Corp. has informed employees it will
switch to a "fully discretionary match" from a "fixed
employer match" for its 401(k) plan, beginning January
1.
Reported by Fred Schneyer
The Wall Street Journal revealed the move in a news account which quoted a letter to employees sent last week. The report said the move allows the company more leeway in deciding whether to fund a match contribution in future years, and the company said any 2009 match may be at a different rate than is currently used.The Journal said it saw the letter and company officials separately confirmed its contents.
“In order to invest and grow responsibly and profitably for the long term, we need to use our benefit dollars in a way that provides the most value to the greatest number of” employees, the letter says, according to the Journal. Starbucks plans to spend about $15 million on a 401(k) match this year, the newspaper said.
According to the news report, Starbucks currently matches between 25% and 150% of the first 4% of eligible workers pay, depending on how long they’ve worked for the company.
Starbucks joins a number of other companies in making similar 401(k) moves (See (k)Plans: Rough Cuts ). However most plan sponsors resonding to a recent PLANSPONSOR survey said they had no plans to change their 401(k) match program (See SURVEY SAYS: What Are Your Plans for Your Match? ).