AOL chief ignites firestorm over 401(k) cuts and ‘distressed babies’ remark

By Jia Lynn Yang, WashPost, Published: February 7

It should have been a glorious week for AOL chief executive Tim Armstrong. His company’s quarterly earnings, announced Thursday, were the best in a decade. “Olympian,” he declared.

Instead, he angered employees, insulted parents with sick babies and shined a light on a practice seeping its way into corporate America that threatens to rob workers of thousands of dollars in 401(k) savings.

The strange turn of events began Tuesday, when employees began learning that AOL was switching its 401(k) match to an annual lump sum, rather than distributing the money throughout the year with every paycheck as it had done before. Only employees who remain at the company through Dec. 31 are eligible, meaning that anyone who leaves midyear won’t see any of the pay.

A number of companies, including Deutsche Bank and IBM, have been cutting their retirement benefits this way, saving millions of dollars just as more Americans are relying primarily on their 401(k)s because traditional pensions are being phased out.

(More here.)