Your employer’s contribution to your 401(k) was a wonderful benefit. However, given our current economic conditions many employers, both large and small, have suspended 401(k) matches. That being said, even without the match, you should continue to contribute to your 401(k). Obviously the most significant reason for doing so is to fund your retirement in a relatively painless and automatic deduction that forces you to save for your future. If possible, it would make sense to contribute more so that you make up for the shortfall created by the lack of matching funds from your employer. Your 401(k) offers many wonderful tax advantages for you as well. If you invest on the traditional side of your 401(k), you invest on a pretax basis, effectively lowering your annual taxable income for the year. Your contribution and the earnings grow tax deferred as long as they remain in this or a rollover IRA account (established after you no longer work for that employer). You are taxed on the funds when you withdraw them at retirement. If your company offers a Roth 401(k) option you can invest on an after-tax basis. Your contribution and the earnings also grow tax deferred as long as they remain in this or a rollover Roth IRA account (established after you no longer work for that employer). The beauty of the Roth 401(k) or Roth IRA is that when you withdraw your funds you pay no taxes. Yes, the withdrawals are tax free! A smart move to make when you no longer work for your employer is to rollover the Roth 401(k) into a Roth IRA. With a Roth IRA you are never required to take minimum distributions. If you do not need this money for your expenses during your lifetime, this is an excellent means of leaving a legacy for your children or heirs.

I’m sorry to hear that your employer has ceased contributions/matching to your 401(k) plan. You may be upset because that benefit was offered to you as part of your employment; however, many companies are dealing with business and financial issues that have them scrambling to cut cost and save money any way they can. Hopefully, the situation will only be temporary. Another important point to put on the table is that you are responsible for your retirement savings, and you shouldn’t let being upset at your employer get in the way of funding your plan. One suggestion is that you may want to re-evaluate your 401(k) plan options, and make sure they match your risk tolerance, time frame and overall investment goals.

Keep contributing! Receiving an employer match to your 401(k) contributions is great when you have it, but whether or not your employer contributes to your plan, you will need to contribute in order to meet your retirement goals. Generally, younger employees need to contribute at least 10 percent of their income towards retirement to accumulate enough assets to retire when they reach 65. Those that wait until their 30s or later to start contributing will need at least 15 percent to accumulate the needed amount for retirement. For those that are fortunate enough to have an employer match their contributions, they can count that match in their contribution needs and it would lower what they would need to put in the plan. So when the employer cuts back on their contributions, it actually puts more of the burden on you to meet your goal so you should actually be increasing your contributions! Use opportunities when you get a promotion or pay raise to increase your contributions.

Definitely continue saving for retirement and, if you can, increase those savings. Investments are on sale right now so your savings dollars are buying more units now than at this time last year. Your choice of savings vehicle depends on several factors, including your current situation (cash reserves, job safety, other assets, age, etc.) and tax bracket. If you are in a 25 percent tax bracket or higher, then it probably makes sense to contribute to your 401(k) (tax savings including state taxes will be about 33 percent). If you are not, and depending on your age, income level, other savings and retirement plans, consider contributing to a Roth IRA first (the 2009 maximum is $5,000, or $6,000, if you are 50 and older). Once you have maxed your Roth IRA contribution, then go back to the 401(k) and contribute there. You can defer up to $16,500 for 2009 ($22,000 if you are 50 or older).