Will American Family Stop Matching 401(k) Contributions?

American Family is in the process of cutting costs to help cope with an economy left behind by the pandemic. Coronavirus took a toll on the entire economy, but it came down on the oil & gas industry especially hard. According to S&P Global, American Family announced plans to cut an additional $1.6 billion in operating expenditures, making the total reduction $2.3 billion.

But what will be on the chopping block? Could American Family be the next corporation to suspend or reduce their company match program?

One of American Family’ major competitors, ExxonMobil, announced that it would stop matching corporate employee’s contributions to their retirement savings plans. To get a better idea of what an end to 401(k) Matching would look like, let’s use them as an example. Earlier this year, ExxonMobil sent a mass email to its employees alerting them that the company match would be suspended indefinitely. The suspension of these benefits officially began on October 1st, 2020. According to Reuters, ExxonMobil has now experienced “its first back-to-back quarterly loss in 36 years because of the drop in demand during the novel coronavirus pandemic.”

ExxonMobil has two savings plans available to corporate employees. The first is the U.S. ExxonMobil Savings Plan (EMSP) and the second is the U.S. Supplement Savings Plan (SSP). The company was matching a 6% minimum employee contribution with 7% of the participant’s pay. These match programs will be reinstated beginning on October 1st, according to Reuters.

There has been a consistent economic trend showing that corporations will decrease or suspend benefits when a recession strikes. We witnessed this in the 2001 recession when General Motors, Charles Schwab, Goodyear Tire & Rubber, and Ford, all decreased or suspended their company match programs. The same happened in 2008, with Forbes reporting that nearly 20% of companies with over 1,000 employees reduced or suspended 401(k) contributions. Unfortunately, that trend seems to be continuing in the wake of the current recession brought on by the Coronavirus pandemic. According to Market Watch, 16 major companies have suspended their 401(k) matching programs last year including Amtrak, Marriott Vacations Worldwide, and Tenet Health. General Electric & Lockheed Martin also made big news with their announcements to cut benefits in 2019. There have even been rumors of AT&T cutting benefits to hit their target goal of $10 billion in cost cuts.

When benefits are frozen, employees in the mid to late portion of their career are usually hurt the most. If American Family' match program does end, it’s a good idea to calculate exactly how much this will affect your retirement savings plan. Forbes recommends maintaining your retirement contributions and even increasing them if you have the funds. This can help compensate for the loss of benefits.

For more information regarding American Family' 401(k) matching program, contact your HR department.

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https://www.reuters.com/business/energy/exxon-plans-reinstate-employer-401k-match-oct-1-2021-07-02/

What type of retirement savings plan does American Family offer to its employees?

American Family offers a 401(k) retirement savings plan to its employees.

Does American Family match employee contributions to the 401(k) plan?

Yes, American Family provides a matching contribution to employee contributions made to the 401(k) plan, subject to certain limits.

What is the eligibility requirement for American Family employees to participate in the 401(k) plan?

Employees of American Family are typically eligible to participate in the 401(k) plan after completing a specified period of service.

Can American Family employees choose how to invest their 401(k) contributions?

Yes, American Family employees can choose from a variety of investment options within the 401(k) plan to tailor their investment strategy.

What is the maximum contribution limit for American Family's 401(k) plan?

The maximum contribution limit for American Family's 401(k) plan is determined by IRS regulations, which may change annually.

Does American Family allow for catch-up contributions in the 401(k) plan?

Yes, American Family allows employees aged 50 and older to make catch-up contributions to their 401(k) plan.

How often can American Family employees change their contribution amounts to the 401(k) plan?

American Family employees can typically change their contribution amounts to the 401(k) plan on a quarterly basis or as specified in the plan documents.

Are loans available from the 401(k) plan at American Family?

Yes, American Family's 401(k) plan may allow employees to take loans against their vested balance, subject to specific terms and conditions.

What happens to my 401(k) balance if I leave American Family?

If you leave American Family, you can choose to roll over your 401(k) balance to another retirement account, cash out, or leave it in the plan if allowed.

Does American Family offer financial education resources for employees regarding the 401(k) plan?

Yes, American Family provides financial education resources to help employees make informed decisions about their 401(k) savings.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

American Family Insurance provides a defined contribution 401(k) plan with company matching contributions. Employees can contribute pre-tax or Roth (after-tax) dollars, and American Family matches a percentage of eligible compensation. The plan includes various investment options, such as target-date funds and mutual funds. Financial planning resources and tools are available to help employees manage their retirement savings.

Layoffs and Restructuring: In October 2023, American Family Insurance confirmed staff reductions aimed at increasing efficiencies across its operations. The layoffs affected various positions, including leadership roles, as the company consolidates areas that provide similar functions across its multiple insurance brands (Sources: Insurance Journal, The Insurer). Financial Performance: The company reported a significant underwriting loss of $1.5 billion in 2022, attributed to inflation and high catastrophe claims. Despite these losses, American Family maintains a strong financial position with plans to reinvest in products and services (Sources: Carrier Management, AM Best). Operational Changes: The restructuring aligns with American Family's strategy to streamline processes and improve cost management, which is essential for sustaining long-term growth and delivering value to customers (Sources: Insurance Journal, The Insurer).

American Family Insurance grants RSUs that vest over time, providing shares upon vesting. Stock options are also part of their compensation, allowing employees to buy shares at a fixed price.

American Family Insurance has consistently enhanced its employee healthcare benefits to adapt to the evolving needs of its workforce. For 2023, the company maintained comprehensive medical, dental, and vision plans. These plans offer a range of services including preventive care, major dental work, and vision care, which covers eye exams, lenses, and frames. Mental health support is also a significant part of the benefits package, with access to counseling services and wellness programs designed to support employees' mental and emotional well-being. These offerings are designed to ensure that employees have access to quality healthcare, promoting a healthier work environment and improving overall productivity. In 2024, American Family Insurance continued to refine its healthcare benefits, placing a greater emphasis on flexibility and comprehensive coverage. The company introduced enhancements such as expanded mental health resources and wellness programs aimed at managing chronic conditions and preventive care. This is particularly important given the current economic and political climate, where healthcare costs are rising and the need for robust employee support systems is critical. The company also provides various options for employees to manage healthcare costs through Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs). By continuously updating its benefits offerings, American Family Insurance ensures that its employees are well-supported in maintaining their health and well-being.

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For more information you can reach the plan administrator for American Family at 6600 american parkway Madison, WI 53783; or by calling them at 1-800-692-6326.

https://www.amfam.com/documents/pension-plan-2022.pdf - Page 5, https://www.amfam.com/documents/pension-plan-2023.pdf - Page 12, https://www.amfam.com/documents/pension-plan-2024.pdf - Page 15, https://www.amfam.com/documents/401k-plan-2022.pdf - Page 8, https://www.amfam.com/documents/401k-plan-2023.pdf - Page 22, https://www.amfam.com/documents/401k-plan-2024.pdf - Page 28, https://www.amfam.com/documents/rsu-plan-2022.pdf - Page 20, https://www.amfam.com/documents/rsu-plan-2023.pdf - Page 14, https://www.amfam.com/documents/rsu-plan-2024.pdf - Page 17, https://www.amfam.com/documents/healthcare-plan-2022.pdf - Page 23