401(k) plans help millions of workers save for retirement. But 401(k)s have been controversial, and a recent proposed move from AOL (NYSE: AOL) to change its matching policy to a once-annual match resulted in a firestorm of criticism that led the company to reverse course.
In the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks at annual year-end matching contributions and why they matter. The concern that workers have is that waiting to match costs them the investment gains on matches throughout the year, and raises the concern that if you quit before the end of the year, you could end up getting no match at all. Dan notes that even though AOL has changed its mind, one study shows that 17% of employers do annual matching contributions, including Morgan Stanley (NYSE:MS), JPMorgan Chase (NYSE:JPM), and Citigroup (NYSE:C), according to reports from workers. Dan concludes that if a once-annual match is the only way to get any match, it's good -- but not as good as getting regular contributions with every paycheck.