Employer cut 403b contribution to zero

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
student
Posts: 4805
Joined: Fri Apr 03, 2015 6:58 am

Re: Employer cut 403b contribution to zero

Post by student » Thu May 21, 2020 7:20 am

Ralph Furley wrote:
Thu May 21, 2020 6:13 am
It seems one way we can tell this financial crisis is different than those of the past - tenured professors at major universities are now being impacted. The Univ. of Michigan is projecting a $1,000,000,000 loss. That's Billion with a B.
This is happening, as you have stated. For example, https://www.chillicothegazette.com/stor ... 215815002/ https://www.insidehighered.com/news/202 ... y-and-more https://www.toledoblade.com/local/educa ... 0200515110

For U of M, the projection is between 400 millions and 1 billion, it covers all campuses and the medical facility. https://record.umich.edu/articles/u-m-i ... shortfall/

smitcat
Posts: 5610
Joined: Mon Nov 07, 2016 10:51 am

Re: Employer cut 403b contribution to zero

Post by smitcat » Thu May 21, 2020 7:29 am

macher wrote:
Thu May 21, 2020 6:35 am
Ralph Furley wrote:
Thu May 21, 2020 6:13 am
It seems one way we can tell this financial crisis is different than those of the past - tenured professors at major universities are now being impacted. The Univ. of Michigan is projecting a $1,000,000,000 loss. That's Billion with a B.

I've often felt like a lot of Bogleheads seem to be government employees, univ. employees, engineers at major corps., etc. with incredibly stable employment and Cadillac retirement plans and options. As a freewheeling entrepreneur working without a net, at times I've felt a little envious of some of those benefits. Most of my retirement saving is forced into taxable accounts at this point.

And now here we are....all in the same boat, together, rowing, and asking why our feet feel wet. OP and others, sorry this is happening to you.
My wife and I earn a total of $94k gross. We both work at University of PA. I work full time, she works permanent part time(28 hours a week). Compare to A LOT of Bogleheads we make far far less. I’m not envious because it’s about lifestyle and debt. We don’t have much debt at all and live a good life. We live in a newly renovated row houses in Philly and are happy.

What I find with people in my income bracket and situation with secure employment is we chug along for 35 years either getting a pension or contributing to an employer match plan and when we are ready to retire the chugging along pays off. Chugging along doesn’t mean you’re in a crappy old job. In fact I enjoy my job and probably won’t retire until I drop dead. My job is gravy and no stress.
"In fact I enjoy my job and probably won’t retire until I drop dead. My job is gravy and no stress."
Do you not have another thread where you are currently stressed about having enough funds for retirement and a hard date goal for that event?

PoundCake
Posts: 26
Joined: Sun Feb 11, 2018 8:23 am

Re: Employer cut 403b contribution to zero

Post by PoundCake » Thu May 21, 2020 7:42 am

I would recommend accelerating your contributions. Here's my story, which explains that recommendation:

I used to work in academia. When the effects of the recession started to ripple out, I accelerated my 403(B) contributions in anticipation of having my job cut. I was a little worried that I might miss out on some of my employer's match, but then the match was eliminated -- along with many other benefits.

We then had a RIF, again linked to the impact of the recession. I survived that, but I later decided to take a different, non-academic job.

Since starting this different job, I've continued the acceleration of my retirement contributions (401(K) and 457), because I like the security of doing this. Also, with my current employer, I don't lose anything with the match. My mate, who works in academia, does the same. Effectively, it means that we don't get paid for the first N months of the year, but we are able to make this work.

Now we have coronavirus, and like many other people, I am facing furloughs and layoffs. My mate's employer has announced cuts akin to what have been posted here. We don't know what will happen, but accelerating our contributions gives us a little peace of mind. Again, this isn't for everyone, but it works for us. Remember that a university's "economic necessity" can easily trump your tenure:

https://www.aaup.org/issues/responding- ... iderations
Last edited by PoundCake on Thu May 21, 2020 7:52 am, edited 1 time in total.

User avatar
CyclingDuo
Posts: 3140
Joined: Fri Jan 06, 2017 9:07 am

Re: Employer cut 403b contribution to zero

Post by CyclingDuo » Thu May 21, 2020 7:45 am

RevFran wrote:
Wed May 13, 2020 7:01 pm
Hello Bogleheads.

Today, my employer - a research-one university - announced that for the coming fiscal year, there would be no employer contributions to our 403b plans. My contribution has been close to 10k a year. I have maxed my own contributions for the last 14 years. I am 43 and think it very likely I’ll stay at this school for the rest of my career.

At the practical level, I am not sure what to do in response to this: a) nothing— accept that I will have a 1/3 reduction in my 403b savings this year and, of course, possibly in the future (if I had to guess, I’d guess that in a few years, the university will resume contributing, but at a lower level) b) try to save some portion of 10k in a taxable account (perhaps act like I am 50 and save the equivalent of the catch up?) c) do whatever I have to, in terms of scrimping, to save an additional 10k (this would be close to impossible...) d) something I am not thinking of.

I appreciate any and all responses and advice. I will note, I am less distraught and panicked about this than I would have predicted — in part because saving at what some people might have thought an insane rate over the years means this is a blow, but it is not catastrophic.
Many of us in academia would say the recession at colleges and universities started in earnest at least 2-3 years ago as the end of the Millennial demographic graduated. The recession at colleges and universities is continuing and the pandemic certainly may be accelerating things as universities and colleges scramble to right size and trim expenditures.

OP - sorry for your loss of the $10K benefit you were receiving via the employer match. I would agree with some others above to calculate how that loss will impact your retirement nest egg and original plans. You can adapt by cutting your household expenses/lifestyle expenses to make up for at least some of it and save more in other investment vehicles such as a Roth IRA and a taxable account. You could also look to pick up some side gig money to be able to save more. Even if this benefit cut is temporary for a fiscal year or more, be flexible in your plans that the match may not return to the full level that it was prior to being suspended.

Speaking from experience, it's a good time to start building a diverse list of option B's...

CyclingDuo
"Everywhere is within walking distance if you have the time." ~ Steven Wright

chw
Posts: 783
Joined: Thu May 24, 2012 4:22 pm

Re: Employer cut 403b contribution to zero

Post by chw » Thu May 21, 2020 9:32 am

macher wrote:
Thu May 21, 2020 6:42 am
chw wrote:
Thu May 21, 2020 5:39 am
OP, I would do nothing. I suspect the 403b match will return in time- likely in 12-24 months. I went thru this at my employer during the Great Recession as well. Employers generally suspend the match to avoid wider layoffs in the organization.
During the Great Recession it didn’t really shake my employer University of PA. Yea there were hiring freezes but everyone got their usual raises.

However you can’t compare this to the Great Recession. Penn doesn’t anticipate opening until September. My wife who also works at Penn is working from home. Her department is still getting outside funding so she’s busy. I’m an essential employee also at Penn and working on a hybrid schedule 20 hours a week but still getting paid 40 hours. The only thing I’m missing is over time which is a significant part of our income which has always been for 25 years like 22% more than my base salary.
I wasn't trying to compare it directly to the Great Recession. Different recessions hit different sectors of the economy. The Great Recession hit financial services particularly hard (where I worked), while this recession is hitting higher ed institutions hard (among other sectors, such as restaurants, airlines, travel, etc).

My point was to stay the course with your savings plan. In 18-24 months you will look back and be glad that did. You may not see huge gains on those investments, but will see signs of life to them, as well as how the future will look at your university. Be thankful you for a university such as Penn, and not one of the smaller institutions that may not survive this recession.

User avatar
greg24
Posts: 3880
Joined: Tue Feb 20, 2007 10:34 am

Re: Employer cut 403b contribution to zero

Post by greg24 » Thu May 21, 2020 10:29 am

During the Great Recession, my R1 employer had two years of a salary freeze and reduced our 403b match by 2%. We generally maximize how much we can reasonable save, so there wasn't much to do but just keep swimming.

So far a salary freeze for next year has been announced. I'm anticipating a 403b match suspension of some level, maybe all of it.

I guess I'll just keep swimming.

:sharebeer

Mudpuppy
Posts: 6038
Joined: Sat Aug 27, 2011 2:26 am
Location: Sunny California

Re: Employer cut 403b contribution to zero

Post by Mudpuppy » Thu May 21, 2020 11:32 am

CyclingDuo wrote:
Thu May 21, 2020 7:45 am
Speaking from experience, it's a good time to start building a diverse list of option B's...
This is very good advice, although I prefer to call this planning for "Option I's", where the I stands for iteration, imaginary, irrational, and infinite. It's a little bit of a math and computer science joke to encapsulate the concept that Option I is a changing beast, subject to the whims of reality crashing down on my best laid plans. A more traditional phrase would be "hope for the best, but plan for the worst".

User avatar
CyclingDuo
Posts: 3140
Joined: Fri Jan 06, 2017 9:07 am

Re: Employer cut 403b contribution to zero

Post by CyclingDuo » Thu May 21, 2020 11:46 am

Mudpuppy wrote:
Thu May 21, 2020 11:32 am
CyclingDuo wrote:
Thu May 21, 2020 7:45 am
Speaking from experience, it's a good time to start building a diverse list of option B's...
This is very good advice, although I prefer to call this planning for "Option I's", where the I stands for iteration, imaginary, irrational, and infinite. It's a little bit of a math and computer science joke to encapsulate the concept that Option I is a changing beast, subject to the whims of reality crashing down on my best laid plans. A more traditional phrase would be "hope for the best, but plan for the worst".
Got it. :D

My mention of option "B's" comes from a pair of articles that were written on Pete the Planner's Blog about those who lose their jobs and what to do in the immediate aftermath. A slew of us professors were removed in a series of waves where I used to hold a full time position two years ago. Leading up to that were the usual annual cuts in the 403b match by the employer as it went from 8% to 6% to 5% to 4% and so on and so forth down the ladder until the position cuts happened next and are still underway.

Not that this will be the fate of the OP, but I had to come up with a list of option "B's" or "Option I's" rather quickly at the time. This was already underway in a lot of academia regarding right sizing and the pandemic seems to be accelerating the process for perhaps the institutions that were perhaps behind the curve compared to others. However, it is important to point out again what has already been said above about the employer match cuts are happening in the corporate sector as well and perhaps her institution is just falling in line with that during this crisis. Nevertheless, developing a list of options seems a worthy exercise just in case.
"Everywhere is within walking distance if you have the time." ~ Steven Wright

Mudpuppy
Posts: 6038
Joined: Sat Aug 27, 2011 2:26 am
Location: Sunny California

Re: Employer cut 403b contribution to zero

Post by Mudpuppy » Thu May 21, 2020 12:30 pm

CyclingDuo wrote:
Thu May 21, 2020 11:46 am
Mudpuppy wrote:
Thu May 21, 2020 11:32 am
CyclingDuo wrote:
Thu May 21, 2020 7:45 am
Speaking from experience, it's a good time to start building a diverse list of option B's...
This is very good advice, although I prefer to call this planning for "Option I's", where the I stands for iteration, imaginary, irrational, and infinite. It's a little bit of a math and computer science joke to encapsulate the concept that Option I is a changing beast, subject to the whims of reality crashing down on my best laid plans. A more traditional phrase would be "hope for the best, but plan for the worst".
Got it. :D

My mention of option "B's" comes from a pair of articles that were written on Pete the Planner's Blog about those who lose their jobs and what to do in the immediate aftermath. A slew of us professors were removed in a series of waves where I used to hold a full time position two years ago. Leading up to that were the usual annual cuts in the 403b match by the employer as it went from 8% to 6% to 5% to 4% and so on and so forth down the ladder until the position cuts happened next and are still underway.

Not that this will be the fate of the OP, but I had to come up with a list of option "B's" or "Option I's" rather quickly at the time. This was already underway in a lot of academia regarding right sizing and the pandemic seems to be accelerating the process for perhaps the institutions that were perhaps behind the curve compared to others. However, it is important to point out again what has already been said above about the employer match cuts are happening in the corporate sector as well and perhaps her institution is just falling in line with that during this crisis. Nevertheless, developing a list of options seems a worthy exercise just in case.
This reminds me of some recent Zoom conversations with co-workers both within my team and with other teams. I work at a California state agency. I've been warning my team all along that we had furloughs during the 2008 recession, so start planning for the same this time around. I've also been cautioning them that the furloughs may be even worse this time, since the economic impact on the state is heavier. So it didn't come as too much of a surprise to my team when the May budget revise had a 10% across-the-board pay reduction for California state employees. The questions I had from my team were more along the lines of "will it impact our pensions", which is an unknown at this point. It all depends on what our union negotiates with the agency. That tells me that I've a good job at getting them to think about the worst and to start planning in advance of it happening.

But in a multi-group Zoom meeting earlier this week with people from other teams, there were still some who were burying their heads in the sand about the pay cut happening at all. There was quite a bit of inventive wishful thinking going on, but I'm not hanging my hat on more federal stimulus relief coming to the state, so I don't think we're escaping this across-the-board cut. Even if we escape it this year, it's still lurking in the shadows for the next fiscal year. Those people are the ones who will be scrambling when reality comes crashing down, because they're hoping for the best but making absolutely no plans for the worst.

That's why I suggested that the OP really look closely at their spending now, before reality has come crashing down, to see if anything can be trimmed. Make the decisions now, when there's not as much of an emotional overhead as there will when reality rears its ugly head. Since the 2008 recession, I've amassed a readily accessible emergency fund (high-yield savings and I Bonds) that has more than a year's worth of take-home pay. And I've already planned out what I'll do with a 10% and 15% pay cut without having to touch the emergency fund. I'll only consider touching the emergency fund (or changing jobs) for a 20% pay cut or higher.

Think of this as the household budget equivalent to an investment policy statement. Just as you should design your IPS to foresee various market conditions and decide in advance how to react to them, so you don't react too emotionally in the heat of the moment, your household budget planning should foresee various income/expense events and how you'd react to them.

User avatar
CyclingDuo
Posts: 3140
Joined: Fri Jan 06, 2017 9:07 am

Re: Employer cut 403b contribution to zero

Post by CyclingDuo » Thu May 21, 2020 12:36 pm

Mudpuppy wrote:
Thu May 21, 2020 12:30 pm
CyclingDuo wrote:
Thu May 21, 2020 11:46 am
Mudpuppy wrote:
Thu May 21, 2020 11:32 am
CyclingDuo wrote:
Thu May 21, 2020 7:45 am
Speaking from experience, it's a good time to start building a diverse list of option B's...
This is very good advice, although I prefer to call this planning for "Option I's", where the I stands for iteration, imaginary, irrational, and infinite. It's a little bit of a math and computer science joke to encapsulate the concept that Option I is a changing beast, subject to the whims of reality crashing down on my best laid plans. A more traditional phrase would be "hope for the best, but plan for the worst".
Got it. :D

My mention of option "B's" comes from a pair of articles that were written on Pete the Planner's Blog about those who lose their jobs and what to do in the immediate aftermath. A slew of us professors were removed in a series of waves where I used to hold a full time position two years ago. Leading up to that were the usual annual cuts in the 403b match by the employer as it went from 8% to 6% to 5% to 4% and so on and so forth down the ladder until the position cuts happened next and are still underway.

Not that this will be the fate of the OP, but I had to come up with a list of option "B's" or "Option I's" rather quickly at the time. This was already underway in a lot of academia regarding right sizing and the pandemic seems to be accelerating the process for perhaps the institutions that were perhaps behind the curve compared to others. However, it is important to point out again what has already been said above about the employer match cuts are happening in the corporate sector as well and perhaps her institution is just falling in line with that during this crisis. Nevertheless, developing a list of options seems a worthy exercise just in case.
This reminds me of some recent Zoom conversations with co-workers both within my team and with other teams. I work at a California state agency. I've been warning my team all along that we had furloughs during the 2008 recession, so start planning for the same this time around. I've also been cautioning them that the furloughs may be even worse this time, since the economic impact on the state is heavier. So it didn't come as too much of a surprise to my team when the May budget revise had a 10% across-the-board pay reduction for California state employees. The questions I had from my team were more along the lines of "will it impact our pensions", which is an unknown at this point. It all depends on what our union negotiates with the agency. That tells me that I've a good job at getting them to think about the worst and to start planning in advance of it happening.

But in a multi-group Zoom meeting earlier this week with people from other teams, there were still some who were burying their heads in the sand about the pay cut happening at all. There was quite a bit of inventive wishful thinking going on, but I'm not hanging my hat on more federal stimulus relief coming to the state, so I don't think we're escaping this across-the-board cut. Even if we escape it this year, it's still lurking in the shadows for the next fiscal year. Those people are the ones who will be scrambling when reality comes crashing down, because they're hoping for the best but making absolutely no plans for the worst.

That's why I suggested that the OP really look closely at their spending now, before reality has come crashing down, to see if anything can be trimmed. Make the decisions now, when there's not as much of an emotional overhead as there will when reality rears its ugly head. Since the 2008 recession, I've amassed a readily accessible emergency fund (high-yield savings and I Bonds) that has more than a year's worth of take-home pay. And I've already planned out what I'll do with a 10% and 15% pay cut without having to touch the emergency fund. I'll only consider touching the emergency fund (or changing jobs) for a 20% pay cut or higher.

Think of this as the household budget equivalent to an investment policy statement. Just as you should design your IPS to foresee various market conditions and decide in advance how to react to them, so you don't react too emotionally in the heat of the moment, your household budget planning should foresee various income/expense events and how you'd react to them.
Great share, Mudpuppy!

You are correct that those who have not been through a recession before in the work force are quickly learning (or will quickly learn) the lesson of having the household balance sheet in tip top shape to survive.

CyclingDuo
"Everywhere is within walking distance if you have the time." ~ Steven Wright

student
Posts: 4805
Joined: Fri Apr 03, 2015 6:58 am

Re: Employer cut 403b contribution to zero

Post by student » Thu May 21, 2020 4:50 pm

This article mentioned some rich universities are cutting their retirement contributions. https://www.insidehighered.com/news/202 ... tributions

Rain
Posts: 29
Joined: Sun Aug 12, 2018 6:24 am

Re: Employer cut 403b contribution to zero

Post by Rain » Thu May 21, 2020 4:50 pm

At the risk of going too far off topic of 403b matches, The Chronicle of Higher Education is tracking employees laid off or furloughed by college.
The Chronicle has identified 162 institutions associated with a layoff, a furlough, or a contract nonrenewal resulting from Covid-19. At least 44,368 employees in academe are known to have been affected by those actions. However, because a specific or approximate count of leaves of absence, terminations, workplace reductions, or contract nonrenewals is not known for every action, the sum represents a significant undercount.
I suggesting looking at the article to see the Feb-to-Mar change in employment figures compared to previous years as well as the list of actions by institution.

[5/30: edited to fix broken link]
Last edited by Rain on Sat May 30, 2020 7:13 am, edited 1 time in total.

User avatar
Artsdoctor
Posts: 4238
Joined: Thu Jun 28, 2012 3:09 pm
Location: Los Angeles, CA

Re: Employer cut 403b contribution to zero

Post by Artsdoctor » Thu May 21, 2020 5:01 pm

I'm sorry to hear about the loss of your employer match to your 403 plan. In speaking to many of my colleagues around the country, I've noticed dramatic and swift changes in compensation to faculty and staff. The changes I've seen have included base salary cuts up to 15%, termination of employer matches to retirement plans, furloughs, and discontinuation of positions. It's only May and there's no reason to think that everything will snap back to previous employment levels in June or July.

Generally, you'd be free to walk if you're unhappy with your employer's benefits package. In the current environment, such a move would give me pause. If you did decide to walk, you'd of course want an alternative job in hand before leaving. But my primary concern would be having any new employer make a change in benefits across the board once you join. I'm not a contract lawyer, but I think that if system-wide changes do occur across the board at the new job, you wouldn't have much recourse there either.

student
Posts: 4805
Joined: Fri Apr 03, 2015 6:58 am

Re: Employer cut 403b contribution to zero

Post by student » Thu May 21, 2020 5:18 pm

Rain wrote:
Thu May 21, 2020 4:50 pm
At the risk of going too far off topic of 403b matches, The Chronicle of Higher Education is tracking employees laid off or furloughed by college.
The Chronicle has identified 162 institutions associated with a layoff, a furlough, or a contract nonrenewal resulting from Covid-19. At least 44,368 employees in academe are known to have been affected by those actions. However, because a specific or approximate count of leaves of absence, terminations, workplace reductions, or contract nonrenewals is not known for every action, the sum represents a significant undercount.
I suggesting looking at the article to see the Feb-to-Mar change in employment figures compared to previous years as well as the list of actions by institution.
I think there is a typo in the setup so that it is not pointing to the correct page https://www.chronicle.com/article/We-re ... grid_hp_1b (Need an account to read it. I think many universities have subscriptions so their employees can automatically read all articles using their email addresses.)

macher
Posts: 160
Joined: Tue Apr 14, 2020 5:21 pm

Re: Employer cut 403b contribution to zero

Post by macher » Thu May 21, 2020 5:20 pm

smitcat wrote:
Thu May 21, 2020 7:29 am
macher wrote:
Thu May 21, 2020 6:35 am
Ralph Furley wrote:
Thu May 21, 2020 6:13 am
It seems one way we can tell this financial crisis is different than those of the past - tenured professors at major universities are now being impacted. The Univ. of Michigan is projecting a $1,000,000,000 loss. That's Billion with a B.

I've often felt like a lot of Bogleheads seem to be government employees, univ. employees, engineers at major corps., etc. with incredibly stable employment and Cadillac retirement plans and options. As a freewheeling entrepreneur working without a net, at times I've felt a little envious of some of those benefits. Most of my retirement saving is forced into taxable accounts at this point.

And now here we are....all in the same boat, together, rowing, and asking why our feet feel wet. OP and others, sorry this is happening to you.
My wife and I earn a total of $94k gross. We both work at University of PA. I work full time, she works permanent part time(28 hours a week). Compare to A LOT of Bogleheads we make far far less. I’m not envious because it’s about lifestyle and debt. We don’t have much debt at all and live a good life. We live in a newly renovated row houses in Philly and are happy.

What I find with people in my income bracket and situation with secure employment is we chug along for 35 years either getting a pension or contributing to an employer match plan and when we are ready to retire the chugging along pays off. Chugging along doesn’t mean you’re in a crappy old job. In fact I enjoy my job and probably won’t retire until I drop dead. My job is gravy and no stress.
"In fact I enjoy my job and probably won’t retire until I drop dead. My job is gravy and no stress."
Do you not have another thread where you are currently stressed about having enough funds for retirement and a hard date goal for that event?
Yes I do and I have a date and a plan thanks for the help and others in that thread. I just increased savings rate and we will be good.

User avatar
Ralph Furley
Posts: 49
Joined: Fri Nov 29, 2019 10:42 am

Re: Employer cut 403b contribution to zero

Post by Ralph Furley » Thu May 21, 2020 9:20 pm

macher wrote:
Thu May 21, 2020 6:35 am
Ralph Furley wrote:
Thu May 21, 2020 6:13 am
It seems one way we can tell this financial crisis is different than those of the past - tenured professors at major universities are now being impacted. The Univ. of Michigan is projecting a $1,000,000,000 loss. That's Billion with a B.

I've often felt like a lot of Bogleheads seem to be government employees, univ. employees, engineers at major corps., etc. with incredibly stable employment and Cadillac retirement plans and options. As a freewheeling entrepreneur working without a net, at times I've felt a little envious of some of those benefits. Most of my retirement saving is forced into taxable accounts at this point.

And now here we are....all in the same boat, together, rowing, and asking why our feet feel wet. OP and others, sorry this is happening to you.
My wife and I earn a total of $94k gross. We both work at University of PA. I work full time, she works permanent part time(28 hours a week). Compare to A LOT of Bogleheads we make far far less. I’m not envious because it’s about lifestyle and debt. We don’t have much debt at all and live a good life. We live in a newly renovated row houses in Philly and are happy.

What I find with people in my income bracket and situation with secure employment is we chug along for 35 years either getting a pension or contributing to an employer match plan and when we are ready to retire the chugging along pays off. Chugging along doesn’t mean you’re in a crappy old job. In fact I enjoy my job and probably won’t retire until I drop dead. My job is gravy and no stress.
That's all that matters. Enjoy what you do and love your life. My business is often very stressful. This week, it has been a lot of fun, fortunately.

User avatar
Ralph Furley
Posts: 49
Joined: Fri Nov 29, 2019 10:42 am

Re: Employer cut 403b contribution to zero

Post by Ralph Furley » Thu May 21, 2020 9:25 pm

student wrote:
Thu May 21, 2020 7:20 am
Ralph Furley wrote:
Thu May 21, 2020 6:13 am
It seems one way we can tell this financial crisis is different than those of the past - tenured professors at major universities are now being impacted. The Univ. of Michigan is projecting a $1,000,000,000 loss. That's Billion with a B.
This is happening, as you have stated. For example, https://www.chillicothegazette.com/stor ... 215815002/ https://www.insidehighered.com/news/202 ... y-and-more https://www.toledoblade.com/local/educa ... 0200515110

For U of M, the projection is between 400 millions and 1 billion, it covers all campuses and the medical facility. https://record.umich.edu/articles/u-m-i ... shortfall/
It always seemed like tenured professor was one of the safest jobs one could get. I admit that I didn't see this coming.

macher
Posts: 160
Joined: Tue Apr 14, 2020 5:21 pm

Re: Employer cut 403b contribution to zero

Post by macher » Fri May 22, 2020 5:37 am

Artsdoctor wrote:
Thu May 21, 2020 5:01 pm
I'm sorry to hear about the loss of your employer match to your 403 plan. In speaking to many of my colleagues around the country, I've noticed dramatic and swift changes in compensation to faculty and staff. The changes I've seen have included base salary cuts up to 15%, termination of employer matches to retirement plans, furloughs, and discontinuation of positions. It's only May and there's no reason to think that everything will snap back to previous employment levels in June or July.

Generally, you'd be free to walk if you're unhappy with your employer's benefits package. In the current environment, such a move would give me pause. If you did decide to walk, you'd of course want an alternative job in hand before leaving. But my primary concern would be having any new employer make a change in benefits across the board once you join. I'm not a contract lawyer, but I think that if system-wide changes do occur across the board at the new job, you wouldn't have much recourse there either.
Got an email from the president of Penn. Looks like things won’t open up until there’s a vaccine. Also my wife’s director sits on the board deciding when Penn should open up. In a Zoom meeting yesterday her director said she would prefer for things to open up no earlier than September. Director said her department is saving a lot money for the building being comopletely shut down. There is still a lot of funding coming in from outside sources.

This got me thinking and might change my mind a little. How long can an institution like Penn stay shut down for at least 6 months? Something is going to have to give when things go back to normal or the new normal. In the email there was no mention of layoffs or furloughs. The president said they are looking at things weekly now going forward and this doesn’t necessarily mean there won’t be furloughs or layoffs down the road.

As far as the 9% employer match now I think that’s a possibility. Take x # employees salary x 9% that’s a boatload of money. My wife is in the defined pension plan because she was hired before the defined contribution plan so I’m 110% positive that’s safe.

OldBallCoach
Posts: 242
Joined: Mon Dec 10, 2018 5:22 pm

Re: Employer cut 403b contribution to zero

Post by OldBallCoach » Fri May 22, 2020 7:39 am

RevFran wrote:
Wed May 13, 2020 7:01 pm
Hello Bogleheads.

Today, my employer - a research-one university - announced that for the coming fiscal year, there would be no employer contributions to our 403b plans. My contribution has been close to 10k a year. I have maxed my own contributions for the last 14 years. I am 43 and think it very likely I’ll stay at this school for the rest of my career.

At the practical level, I am not sure what to do in response to this: a) nothing— accept that I will have a 1/3 reduction in my 403b savings this year and, of course, possibly in the future (if I had to guess, I’d guess that in a few years, the university will resume contributing, but at a lower level) b) try to save some portion of 10k in a taxable account (perhaps act like I am 50 and save the equivalent of the catch up?) c) do whatever I have to, in terms of scrimping, to save an additional 10k (this would be close to impossible...) d) something I am not thinking of.

I appreciate any and all responses and advice. I will note, I am less distraught and panicked about this than I would have predicted — in part because saving at what some people might have thought an insane rate over the years means this is a blow, but it is not catastrophic.
Well at my university I took a 20% pay cut as well as a stop in the 403B match. Maybe folks have been let go and I think its only going to get worse in higher education going forward. I would just increase yor brokeage contributions and figure how to save some money in a different way or perhaps find a new gig. I am close to retirement so I am not doing anything......my PA daughter just had the same thing happen to her at the hospital she worked at....they gave her a 15% paycut as well as a stop to the match...She just turned in her 2 month notice and is taking a job at another hospital which will pay her more...I think a lot of places are using this Virus as a way to fix their previous mismanagement. Take care of yourself first.

aristotelian
Posts: 7406
Joined: Wed Jan 11, 2017 8:05 pm

Re: Employer cut 403b contribution to zero

Post by aristotelian » Fri May 22, 2020 8:00 am

Ralph Furley wrote:
Thu May 21, 2020 9:25 pm
It always seemed like tenured professor was one of the safest jobs one could get. I admit that I didn't see this coming.
Tenure only protects you from removal for job performance. Nothing can protect you from the institution going under, and higher education has been increasingly stressed since even before 2008.

macher
Posts: 160
Joined: Tue Apr 14, 2020 5:21 pm

Re: Employer cut 403b contribution to zero

Post by macher » Fri May 22, 2020 8:13 am

OldBallCoach wrote:
Fri May 22, 2020 7:39 am
RevFran wrote:
Wed May 13, 2020 7:01 pm
Hello Bogleheads.

Today, my employer - a research-one university - announced that for the coming fiscal year, there would be no employer contributions to our 403b plans. My contribution has been close to 10k a year. I have maxed my own contributions for the last 14 years. I am 43 and think it very likely I’ll stay at this school for the rest of my career.

At the practical level, I am not sure what to do in response to this: a) nothing— accept that I will have a 1/3 reduction in my 403b savings this year and, of course, possibly in the future (if I had to guess, I’d guess that in a few years, the university will resume contributing, but at a lower level) b) try to save some portion of 10k in a taxable account (perhaps act like I am 50 and save the equivalent of the catch up?) c) do whatever I have to, in terms of scrimping, to save an additional 10k (this would be close to impossible...) d) something I am not thinking of.

I appreciate any and all responses and advice. I will note, I am less distraught and panicked about this than I would have predicted — in part because saving at what some people might have thought an insane rate over the years means this is a blow, but it is not catastrophic.
Well at my university I took a 20% pay cut as well as a stop in the 403B match. Maybe folks have been let go and I think its only going to get worse in higher education going forward. I would just increase yor brokeage contributions and figure how to save some money in a different way or perhaps find a new gig. I am close to retirement so I am not doing anything......my PA daughter just had the same thing happen to her at the hospital she worked at....they gave her a 15% paycut as well as a stop to the match...She just turned in her 2 month notice and is taking a job at another hospital which will pay her more...I think a lot of places are using this Virus as a way to fix their previous mismanagement. Take care of yourself first.
If University of PA decides to not contribute 9% I’ll just have to find ways to save an extra 9% until they start contributing again. Even though it’s in our union contract that the university contributes 9% I was told there are loopholes for the university to stop until they are able to do so. My retirement planning is based on the 9% match so it’s important factor. My wife’s pension at the same university I’m not worried about.

smitcat
Posts: 5610
Joined: Mon Nov 07, 2016 10:51 am

Re: Employer cut 403b contribution to zero

Post by smitcat » Fri May 22, 2020 8:23 am

macher wrote:
Fri May 22, 2020 8:13 am
OldBallCoach wrote:
Fri May 22, 2020 7:39 am
RevFran wrote:
Wed May 13, 2020 7:01 pm
Hello Bogleheads.

Today, my employer - a research-one university - announced that for the coming fiscal year, there would be no employer contributions to our 403b plans. My contribution has been close to 10k a year. I have maxed my own contributions for the last 14 years. I am 43 and think it very likely I’ll stay at this school for the rest of my career.

At the practical level, I am not sure what to do in response to this: a) nothing— accept that I will have a 1/3 reduction in my 403b savings this year and, of course, possibly in the future (if I had to guess, I’d guess that in a few years, the university will resume contributing, but at a lower level) b) try to save some portion of 10k in a taxable account (perhaps act like I am 50 and save the equivalent of the catch up?) c) do whatever I have to, in terms of scrimping, to save an additional 10k (this would be close to impossible...) d) something I am not thinking of.

I appreciate any and all responses and advice. I will note, I am less distraught and panicked about this than I would have predicted — in part because saving at what some people might have thought an insane rate over the years means this is a blow, but it is not catastrophic.
Well at my university I took a 20% pay cut as well as a stop in the 403B match. Maybe folks have been let go and I think its only going to get worse in higher education going forward. I would just increase yor brokeage contributions and figure how to save some money in a different way or perhaps find a new gig. I am close to retirement so I am not doing anything......my PA daughter just had the same thing happen to her at the hospital she worked at....they gave her a 15% paycut as well as a stop to the match...She just turned in her 2 month notice and is taking a job at another hospital which will pay her more...I think a lot of places are using this Virus as a way to fix their previous mismanagement. Take care of yourself first.
If University of PA decides to not contribute 9% I’ll just have to find ways to save an extra 9% until they start contributing again. Even though it’s in our union contract that the university contributes 9% I was told there are loopholes for the university to stop until they are able to do so. My retirement planning is based on the 9% match so it’s important factor. My wife’s pension at the same university I’m not worried about.
We have always found it easier to add some income as opposed to cutting expenses over the years.

User avatar
White Coat Investor
Posts: 14645
Joined: Fri Mar 02, 2007 9:11 pm
Location: Greatest Snow On Earth

Re: Employer cut 403b contribution to zero

Post by White Coat Investor » Fri May 22, 2020 8:36 am

RevFran wrote:
Wed May 13, 2020 7:01 pm
Hello Bogleheads.

Today, my employer - a research-one university - announced that for the coming fiscal year, there would be no employer contributions to our 403b plans. My contribution has been close to 10k a year. I have maxed my own contributions for the last 14 years. I am 43 and think it very likely I’ll stay at this school for the rest of my career.

At the practical level, I am not sure what to do in response to this: a) nothing— accept that I will have a 1/3 reduction in my 403b savings this year and, of course, possibly in the future (if I had to guess, I’d guess that in a few years, the university will resume contributing, but at a lower level) b) try to save some portion of 10k in a taxable account (perhaps act like I am 50 and save the equivalent of the catch up?) c) do whatever I have to, in terms of scrimping, to save an additional 10k (this would be close to impossible...) d) something I am not thinking of.

I appreciate any and all responses and advice. I will note, I am less distraught and panicked about this than I would have predicted — in part because saving at what some people might have thought an insane rate over the years means this is a blow, but it is not catastrophic.
I've never received a match. It's worked out okay. You can either save less or spend less in response to this cut in pay. Or you can go get a side gig or pick up some overtime. Your choice.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

pennywise
Posts: 762
Joined: Sat May 31, 2014 6:22 am

Re: Employer cut 403b contribution to zero

Post by pennywise » Fri May 22, 2020 8:42 am

Ralph Furley wrote:
Thu May 21, 2020 9:25 pm
student wrote:
Thu May 21, 2020 7:20 am
Ralph Furley wrote:
Thu May 21, 2020 6:13 am
It seems one way we can tell this financial crisis is different than those of the past - tenured professors at major universities are now being impacted. The Univ. of Michigan is projecting a $1,000,000,000 loss. That's Billion with a B.
This is happening, as you have stated. For example, https://www.chillicothegazette.com/stor ... 215815002/ https://www.insidehighered.com/news/202 ... y-and-more https://www.toledoblade.com/local/educa ... 0200515110

For U of M, the projection is between 400 millions and 1 billion, it covers all campuses and the medical facility. https://record.umich.edu/articles/u-m-i ... shortfall/
It always seemed like tenured professor was one of the safest jobs one could get. I admit that I didn't see this coming.
/quote]

My highlighted statement may be the figurative writing on the gravestone for tenure track university faculty as a group (not necessarily the commenting professor).

The business model of university education has been shaky for years now due to ever increasing tuition aimed at a decreasing student pool, ever bloating levels of administration and of course the ever hardening recalcitrance of tenured faculty, particularly aging tenured faculty, to update their methods of teaching and research.

The tenure system's unique perquisite of granting employees who are tenured lifetime complete immunity from termination (other than for gross malfeasance or the actual closure of the unit) is, like pensions and retiree medical coverage, becoming obsolete in today's professional world.

Now universities are facing enormous loss of income related to international enrollment which was a cash cow, as well as inevitably tighter budgets for government-affiliated programs such as state systems. Research funding has been drying up and will also be adversely affected by the economic crisis of course.

I hope the industry will use the current emergency to say goodbye to all of the 80 year old professors who haven't updated a syllabus or peeked into a lab in years or maybe decades, and who teach (grudgingly) one or two courses a year for full salary and benefits.

What's the old saying about crisis being another word for opportunity?

student
Posts: 4805
Joined: Fri Apr 03, 2015 6:58 am

Re: Employer cut 403b contribution to zero

Post by student » Fri May 22, 2020 8:56 am

pennywise wrote:
Fri May 22, 2020 8:42 am
I hope the industry will use the current emergency to say goodbye to all of the 80 year old professors who haven't updated a syllabus or peeked into a lab in years or maybe decades, and who teach (grudgingly) one or two courses a year for full salary and benefits.

What's the old saying about crisis being another word for opportunity?
I hope the statement regarding teach one or two courses a year is a tongue in cheek expression. Unless someone is at a top university bringing in a lot of grant money, a professor is going to teach a lot more. For a typical university that do not offer a doctoral program, a tenured professor typically teach 3-4 courses per semester. See, for example, https://www.insidehighered.com/news/201 ... ace-budget

aaronjb_ME
Posts: 18
Joined: Sat Nov 24, 2018 7:42 pm

Re: Employer cut 403b contribution to zero

Post by aaronjb_ME » Fri May 22, 2020 9:24 am

White Coat Investor wrote:
Fri May 22, 2020 8:36 am
RevFran wrote:
Wed May 13, 2020 7:01 pm
Hello Bogleheads.

Today, my employer - a research-one university - announced that for the coming fiscal year, there would be no employer contributions to our 403b plans. My contribution has been close to 10k a year. I have maxed my own contributions for the last 14 years. I am 43 and think it very likely I’ll stay at this school for the rest of my career.

At the practical level, I am not sure what to do in response to this: a) nothing— accept that I will have a 1/3 reduction in my 403b savings this year and, of course, possibly in the future (if I had to guess, I’d guess that in a few years, the university will resume contributing, but at a lower level) b) try to save some portion of 10k in a taxable account (perhaps act like I am 50 and save the equivalent of the catch up?) c) do whatever I have to, in terms of scrimping, to save an additional 10k (this would be close to impossible...) d) something I am not thinking of.

I appreciate any and all responses and advice. I will note, I am less distraught and panicked about this than I would have predicted — in part because saving at what some people might have thought an insane rate over the years means this is a blow, but it is not catastrophic.
I've never received a match. It's worked out okay. You can either save less or spend less in response to this cut in pay. Or you can go get a side gig or pick up some overtime. Your choice.
Alternatively, since higher education - where I'm also employed, like OP - is likely facing a forced shift in both business model and expected revenue, finding an analogous position in another industry may be a better option. Once these employer retirement contributions go away, I have no expectation they'll return, and if they do in the future, the when and how much are huge variables.

For instance, residential liberal arts colleges that rely on a full in-person experience to justify tuition may find themselves at a crossroads - change what that experience is, mothball until that experience can return, or transition the business model to one that includes hybrid and distance learning (the latter being a very unlikely choice for the leaders of many of these institutions). The impact of the pandemic will almost certainly accelerate the closure of many institutions that were already operating on the margins.

Balancing the current fiscal year's operating budget due to the loss in revenue and refunds is one thing, but many of us in higher education are waiting for letters from our CFOs on what next year's budget will look like, and that will help inform our employment decisions.

delamer
Posts: 9951
Joined: Tue Feb 08, 2011 6:13 pm

Re: Employer cut 403b contribution to zero

Post by delamer » Fri May 22, 2020 9:38 am

Ralph Furley wrote:
Thu May 21, 2020 6:13 am
It seems one way we can tell this financial crisis is different than those of the past - tenured professors at major universities are now being impacted. The Univ. of Michigan is projecting a $1,000,000,000 loss. That's Billion with a B.

I've often felt like a lot of Bogleheads seem to be government employees, univ. employees, engineers at major corps., etc. with incredibly stable employment and Cadillac retirement plans and options. As a freewheeling entrepreneur working without a net, at times I've felt a little envious of some of those benefits. Most of my retirement saving is forced into taxable accounts at this point.

And now here we are....all in the same boat, together, rowing, and asking why our feet feel wet. OP and others, sorry this is happening to you.
I can think of several couples I know where one is more in the freewheeling entrepreneur category and the other is in a stable job with excellent benefits. Good synergy! As a family group, you get the best of both worlds.

But now, to extend your analogy, many of the boats are leaking. My husband and I both had jobs with traditional pensions plus 401(k)s. We never saved (for retirement) at the level some Bogleheads do, but we still contributed about 10% of our income. Now there is no immediate threat to our pensions, but it is still good to have that nest egg too.

student
Posts: 4805
Joined: Fri Apr 03, 2015 6:58 am

Re: Employer cut 403b contribution to zero

Post by student » Fri May 22, 2020 9:45 am

delamer wrote:
Fri May 22, 2020 9:38 am
I can think of several couples I know where one is more in the freewheeling entrepreneur category and the other is in a stable job with excellent benefits. Good synergy! As a family group, you get the best of both worlds.
Yes. Several of my younger colleagues are using the same strategy. The husband is a tenured/tenure-track faculty member and the wife is earning big bucks in industry.

Mudpuppy
Posts: 6038
Joined: Sat Aug 27, 2011 2:26 am
Location: Sunny California

Re: Employer cut 403b contribution to zero

Post by Mudpuppy » Fri May 22, 2020 11:43 am

macher wrote:
Fri May 22, 2020 8:13 am
If University of PA decides to not contribute 9% I’ll just have to find ways to save an extra 9% until they start contributing again. Even though it’s in our union contract that the university contributes 9% I was told there are loopholes for the university to stop until they are able to do so. My retirement planning is based on the 9% match so it’s important factor. My wife’s pension at the same university I’m not worried about.
Most collective bargaining agreements have a footnote, out clause, etc. about certain provisions being suspended during a budgetary crisis. If you look closely at your contract, it probably has a statement like this with regards to the 9% match. If such a statement is not in the contract, the employer can also negotiate an emergency amendment to the contract with the union. It's not really a loophole if it is in the contract. You should subscribe to whatever email newsletter your union provides, or regularly check their website, to stay in the loop on these matters.

GenawithanE
Posts: 30
Joined: Mon Aug 26, 2019 11:14 pm

Re: Employer cut 403b contribution to zero

Post by GenawithanE » Fri May 22, 2020 12:07 pm

Given the financial stress that universities are experiencing, this is an unfortunate but rational decision. I wouldn't count on getting a better deal at a similar university.
Are you in a bargaining unit? If so, this could not have been done without negotiation. If not, maybe it's time to think about it. In any event, i would be asking questions like what are the plans for the future, will they reinstate at a certain point and are they willing to state what that point is?
Are there other benefits you would like that don't hit their bottom line that you could request?
Did the university get federal funds to help with the economic impact of corona? Is there hay to be made that they have reduced these kinds of payments in the face of that?
Agree with other posters that one thing to consider if whether you have more funds to put into savings.

oldfatguy
Posts: 587
Joined: Tue Feb 27, 2018 1:38 pm

Re: Employer cut 403b contribution to zero

Post by oldfatguy » Fri May 22, 2020 1:19 pm

student wrote:
Fri May 22, 2020 8:56 am
pennywise wrote:
Fri May 22, 2020 8:42 am
I hope the industry will use the current emergency to say goodbye to all of the 80 year old professors who haven't updated a syllabus or peeked into a lab in years or maybe decades, and who teach (grudgingly) one or two courses a year for full salary and benefits.

What's the old saying about crisis being another word for opportunity?
I hope the statement regarding teach one or two courses a year is a tongue in cheek expression. Unless someone is at a top university bringing in a lot of grant money, a professor is going to teach a lot more. For a typical university that do not offer a doctoral program, a tenured professor typically teach 3-4 courses per semester. See, for example, https://www.insidehighered.com/news/201 ... ace-budget
I always chuckle when I read the comments about faculty workloads. There are quite a few on this site who love to pontificate about the evils and failure of higher education, most of whom demonstrate that they know little to nothing about it.

User avatar
CyclingDuo
Posts: 3140
Joined: Fri Jan 06, 2017 9:07 am

Re: Employer cut 403b contribution to zero

Post by CyclingDuo » Fri May 22, 2020 2:00 pm

pennywise wrote:
Fri May 22, 2020 8:42 am
What's the old saying about crisis being another word for opportunity?
Yes. That's à propos.

:beer
"Everywhere is within walking distance if you have the time." ~ Steven Wright

User avatar
Ralph Furley
Posts: 49
Joined: Fri Nov 29, 2019 10:42 am

Re: Employer cut 403b contribution to zero

Post by Ralph Furley » Sat May 23, 2020 9:42 am

aristotelian wrote:
Fri May 22, 2020 8:00 am
Ralph Furley wrote:
Thu May 21, 2020 9:25 pm
It always seemed like tenured professor was one of the safest jobs one could get. I admit that I didn't see this coming.
Tenure only protects you from removal for job performance. Nothing can protect you from the institution going under, and higher education has been increasingly stressed since even before 2008.
My point was simply that a tenured professor had unusually high job security.

User avatar
Ralph Furley
Posts: 49
Joined: Fri Nov 29, 2019 10:42 am

Re: Employer cut 403b contribution to zero

Post by Ralph Furley » Sat May 23, 2020 9:46 am

pennywise wrote:
Fri May 22, 2020 8:42 am
Ralph Furley wrote:
Thu May 21, 2020 9:25 pm
student wrote:
Thu May 21, 2020 7:20 am
Ralph Furley wrote:
Thu May 21, 2020 6:13 am
It seems one way we can tell this financial crisis is different than those of the past - tenured professors at major universities are now being impacted. The Univ. of Michigan is projecting a $1,000,000,000 loss. That's Billion with a B.
This is happening, as you have stated. For example, https://www.chillicothegazette.com/stor ... 215815002/ https://www.insidehighered.com/news/202 ... y-and-more https://www.toledoblade.com/local/educa ... 0200515110

For U of M, the projection is between 400 millions and 1 billion, it covers all campuses and the medical facility. https://record.umich.edu/articles/u-m-i ... shortfall/
It always seemed like tenured professor was one of the safest jobs one could get. I admit that I didn't see this coming.
/quote]

My highlighted statement may be the figurative writing on the gravestone for tenure track university faculty as a group (not necessarily the commenting professor).

The business model of university education has been shaky for years now due to ever increasing tuition aimed at a decreasing student pool, ever bloating levels of administration and of course the ever hardening recalcitrance of tenured faculty, particularly aging tenured faculty, to update their methods of teaching and research.

The tenure system's unique perquisite of granting employees who are tenured lifetime complete immunity from termination (other than for gross malfeasance or the actual closure of the unit) is, like pensions and retiree medical coverage, becoming obsolete in today's professional world.

Now universities are facing enormous loss of income related to international enrollment which was a cash cow, as well as inevitably tighter budgets for government-affiliated programs such as state systems. Research funding has been drying up and will also be adversely affected by the economic crisis of course.

I hope the industry will use the current emergency to say goodbye to all of the 80 year old professors who haven't updated a syllabus or peeked into a lab in years or maybe decades, and who teach (grudgingly) one or two courses a year for full salary and benefits.

What's the old saying about crisis being another word for opportunity?
Agreed Pennywise. The system always seemed a bit nutty to me (get it? :wink: ). Also, I'm sure the loss of revenue caused by not playing football and basketball would be massive.

stlrick
Posts: 468
Joined: Mon Apr 14, 2008 4:37 pm

Re: Employer cut 403b contribution to zero

Post by stlrick » Sat May 23, 2020 10:51 am

Mudpuppy wrote:
Wed May 13, 2020 9:01 pm

I would agree with this approach, but I have another reason to recommend looking closely at your spending. Eliminating the 403b match is the first sign of fiscal distress at your institution. Universities will likely suffer more fiscal distress due to the economy, changes in research funding and fundraising, and changes in enrollment that are resulting from the pandemic. If a salary cut is the next stage, you should already have reviewed your spending when you aren't as fiscally distressed, and therefore are more able to make choices based in logic instead of in emotion.
It is not necessarily a sign of fiscal distress. The cancellation of 403(b) employer contributions has already been announced by Duke, Northwestern, and John Hopkins. These are among the most financially secure institutions in the country. It is a way to reduce next year's deficit, created by a variety of issues associated with the pandemic. The match will be reinstated, both because these institutions compete with each other for faculty, and because if tenured faculty do not have adequate retirement savings, they do not need to retire. It is self-defeating for the institution not to contribute to growth of the retirement plan. Moreover, tenured faculty can't just get up and move. A search for a new faculty member at a research university is a long process. Even those that have not yet cancelled the match have announced hiring freezes for next year, including Harvard, Yale, Princeton, and Stanford.

Mudpuppy
Posts: 6038
Joined: Sat Aug 27, 2011 2:26 am
Location: Sunny California

Re: Employer cut 403b contribution to zero

Post by Mudpuppy » Sat May 23, 2020 12:51 pm

stlrick wrote:
Sat May 23, 2020 10:51 am
Mudpuppy wrote:
Wed May 13, 2020 9:01 pm

I would agree with this approach, but I have another reason to recommend looking closely at your spending. Eliminating the 403b match is the first sign of fiscal distress at your institution. Universities will likely suffer more fiscal distress due to the economy, changes in research funding and fundraising, and changes in enrollment that are resulting from the pandemic. If a salary cut is the next stage, you should already have reviewed your spending when you aren't as fiscally distressed, and therefore are more able to make choices based in logic instead of in emotion.
It is not necessarily a sign of fiscal distress. The cancellation of 403(b) employer contributions has already been announced by Duke, Northwestern, and John Hopkins. These are among the most financially secure institutions in the country. It is a way to reduce next year's deficit, created by a variety of issues associated with the pandemic. The match will be reinstated, both because these institutions compete with each other for faculty, and because if tenured faculty do not have adequate retirement savings, they do not need to retire. It is self-defeating for the institution not to contribute to growth of the retirement plan. Moreover, tenured faculty can't just get up and move. A search for a new faculty member at a research university is a long process. Even those that have not yet cancelled the match have announced hiring freezes for next year, including Harvard, Yale, Princeton, and Stanford.
Everything you've cited sounds like short-term fiscal distress as a result of the pandemic to me. Note that I never said anything about fiscal insolvency or long-term fiscal distress in my replies (others may have, but not me). However, I was concerned that the OP wasn't even prepared to weather short-term fiscal distress (which in my mind means anywhere from 1-5 years) from the OP's institution.

Just as the Bogleheads philosophy advocates having an IPS prepared in advance on how one would react to "bad storms" in the stock market, I'm advocating to have a personal budget statement prepared in advance for how one would handle various income/expense scenarios. A year ago would have been the best time to prepare to weather short-term fiscal "storms", but now is the second-best time to prepare, while the "storm" is still on the horizon, but it's not yet proverbially pouring down.

Rain
Posts: 29
Joined: Sun Aug 12, 2018 6:24 am

Re: Employer cut 403b contribution to zero

Post by Rain » Sat May 30, 2020 7:17 am

student wrote:
Thu May 21, 2020 5:18 pm


I think there is a typo in the setup so that it is not pointing to the correct page https://www.chronicle.com/article/We-re ... grid_hp_1b (Need an account to read it. I think many universities have subscriptions so their employees can automatically read all articles using their email addresses.)
Good catch and thank you. I've fixed the link in my post.

Post Reply