Matching contributions to employees' 401(k) plans were among the casualties of the recession for some companies over the last year or two.

Among 401(k) plans administered by Schwab Retirement Plan Services, about 17% either suspended or reduced their match by the first quarter of 2009, while nearly 30% of firms in particularly hard-hit sectors like manufacturing and retail followed suit.

The good news: The match is on the rebound. Research from Schwab reveals that anywhere from one-third to one-half of firms that stopped or reduced their matching contributions are thinking about reinstating them during 2010.

Clearly, many companies recognize the importance of a robust 401(k) plan offering in attracting and retaining high-quality workers, fostering a positive company image and generating long-term financial success.

A 2009 Schwab study of more than 200 finance and HR executives found 96% of respondents said that the company match was important, making it the most highly rated plan feature.

The main point: If your company cut its match during the downturn, you should be looking to relaunch it as soon as possible. However, don't simply return to the old way of doing things. Reinstating your match offers a perfect opportunity to refine your approach to matching and other key plan components. Chances are, you'll find one or more ways to make your plan even better than before.

As you evaluate your program, pay particular attention to these key areas:

Benchmarking around the firm's peers and goals

Compare your plan's match formula and overall structure to others in your industry, similar-sized companies and other firms in your geographic region to see if your retirement plan is still competitive. If one of your goals is to attract and retain key talent, for example, make sure you structure the match so that highly desirable candidates are more inclined to work for you than the competition.

The plan's match ceiling

Research shows that employees will most often set their deferral rate at the plan's "match ceiling"- the amount of salary they must defer to receive the maximum employer matching contribution. So if your firm matches up to 6% of compensation, you'll find that employees tend to choose 6% as their saving rate.

Given that, it probably makes sense to reset to a higher match ceiling to encourage employees to save more. Say, for example, that you previously offered a 100% match up to three percent of compensation. By reinstating a 50% match up to six percent, participants would have to defer an additional 3% to get the maximum match.

Meanwhile, the cost of the maximum match to the company would remain the same. Even if you intend to reinstate your match at a lower level than before, it can be beneficial to keep the match ceiling stable and reduce the actual percentage you match.

Employee demographics

By breaking down plan participants by their salary level, years of service, position and age, you can see participation and savings rates for each category - allowing you to identify any weak spots that need shoring up.

Conversely, you might discover that your firm has high turnover among employees who have been with the firm for two years or less. In that case, a structure in which employees receive increasingly higher match percentages the longer they work for the firm could be a more cost-effective approach than simply offering an across-the-board match percentage from day one. Another solution may be to implement a one or two year vesting schedule.

Regardless of which approach you choose, keep workers in the loop. Consider using the different communication methods available to your employees, such as e-mail, company intranet and mailings, to let them know that the match is back and underscore its importance in helping them achieve secure retirements.

Give employees as much advance notice of the reinstatement as possible so they have plenty of time to find ways to set aside money. And, explain the reasons why you're structuring the match as you are, as well as any anticipated changes you expect to make going forward.

For example, some companies today may need to initially reintroduce their match at a lower percentage than it was before. In such cases, you may want to communicate to participants that your goal is to increase the match to higher levels as soon as economic conditions allow.

While you're at it, you can take the opportunity to remind employees about other strong features of your plan that they may not know about or take full advantage of. These might include free advice sessions and workshops, target-date fund options that make diversifying and rebalancing easier, or a Roth 401(k) plan option. When you reinstate your match, you'll have workers' attention - so take advantage of the opportunity to create awareness of all the ways the plan can help them save for retirement.

Options to consider

Keep in mind that reinstating the match also is a great time to rethink other key aspects of your plan that could have major benefits for the firm and its workers. For example:

* Investment education. Offering advice consultations and/or managed accounts to get answers to questions about saving and investing can be an excellent way to get existing participants more deeply engaged in the plan. We find that, on average, employees who receive such consultations more than double their savings rates because they feel more confident about investing and happier with their plan. This is also a great time to encourage participants to examine their asset allocation and ensure their investment mix is appropriate for their goals, age and risk-tolerance level.

* Automatic savings-rate increases. While auto-enrollment is increasing in popularity, far fewer companies take an important next step: automatically raising participants' deferral levels each year. This can be a particularly smart move if, like at many firms, your auto-enrollment plan starts participants off at a relatively low deferral level, such as 3%. An annual bump-up can help put employees on a much stronger path to a more secure retirement.

There's simply no question that a company match is a major benefit to any 401(k) plan, and that reinstating it is a vital move to make. But don't stop there. In the long run, your plan will have a far more positive impact on the company and its key people if you take time now to make it truly great.

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