Wells Fargo has scrapped a plan to halt its 401(k) matching contributions for employees who earn more than $250,000.
“After additional review and consideration, we have decided to continue offering the 6% company matching contribution to all 401(k) Plan eligible employees, regardless of compensation level,” the spokesperson tells FA-IQ in an email.
“At the same time, we remain committed to putting a greater emphasis on how we support our lower-paid employees through our compensation and benefits program, including through a new nondiscretionary base 401(k) Plan contribution,” she added.
The reversal come less than 42 hours after the bank unveiled the planned 401(k) matching contribution changes to employees.
In a comment on FA-IQ’s article about the planned halting of the matching contributions, Louie Valdez, managing director at Valdez & Polanski Wealth Management Group, which is part of the Wells Fargo advisor network, said “generous employee benefits” was the reason he and his team moved to Wells Fargo from UBS. “Hopefully, the Stagecoach drivers will see this is not in their best interest,” he said on Friday.
When Wells Fargo announced its halting of matching contributions for its higher-paid employees, it also announced would start contributing 1% of “certified compensation” to 401(k) accounts of all employees who earn under $75,000 annually, effective Jan. 1, 2021. That will continue, the spokesperson said.
The bank will make also “discretionary” 401(k) contributions — ranging from 0% to 4% of yearly compensation — for employees earning less than $150,000 annually, according to a Wells Fargo memo sent to all employees earlier in the week.
The spokesperson says those “discretionary” contributions will persist in light of the policy reversal.
Earlier this week, Well Fargo had said the changes were aimed at “supporting our lower-paid employees” and helping “create greater economic opportunities for all employees,” according to a memo sent to employees. Those changes were not intended to realize significant savings, the memo adds.
For all employees, the bank’s matching contribution will be made annually and deposited at the end of the plan year, with compensation for eligibility purposes defined as annual certified compensation paid in the year, plus any deferred compensation amounts, according to the spokesperson.
This article was originally published as a breaking news article on Oct. 23, 2020.
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