The roughly 8,000 active participants in Visa Inc.’s $1.7billion 401(k) plan are a fortunate lot.

For starters, the Bay area-based credit card provider pays itsemployees well, with a median base compensation of $130,000 a year.Only 10 companies offered higher base salaries in 2017, accordingto the recruiting website Glassdoor.

The company also offers a really competitive 401(k) plan, matching 200 percent of everydollar employees defer up to 3 percent of salary. For that level ofgenerosity, and the plan’s low fees, BrightScope ranks the plannear the pinnacle of Visa’s peer group.

Now the plan may rank as the highest. In the wake of thetax bill’s passage, Visa is upping its match to200 percent of deferrals up to 5 percent of pay.

For the median wage earner in the company, a 5 percent deferralamounts to $6,500. Counting the new match--$13,000--that makes fora $19,500 annual total contribution.

Under the previous structure, deferring 5 percent of the mediansalary would have meant a $7,800 (2 x 3 percent) company match, fora total annual contribution of $11,700.

Now, those able to defer 5 percent will realize more than $5,000in increased company contributions.

What it means for a mid-career TDF investor

Vanguard’s target-date series accounts for 16 percent of theVisa’s plan assets, according to Form 5500 data.

A mid-career employee--in her 40s and earning the company mediansalary--who is defaulted into the Vanguard Target Retirement 2040Fund would contribute $429,000 between now and retirement under thenew match formula, if she manages to defer 5 percent of hersalary.

The average annual return in the 2040 Fund has been 7.39percent. Assuming the participant starts with an account balance ofzero, her account can grow to $1.04 million over the next 22 yearsif she maintains the 5 percent deferral.

Under the new match formula, about $650,000 of that will resultfrom company contributions.

If she is starting with $100,000 in her account, the balance atretirement would surpass $1.5 million.

Under the previous match structure, and assuming the samenumbers, she would amass a 401(k) account balance of $765,335 atretirement. Had she started with $100,000 in savings, she wouldamass $1.24 million.

‘We don’t know where this is going to go’

Visa joins Aflac and SunTrust as the companies that are usingthe windfall of a lower corporate rate to bolster retirementsavings plans. Visa’s effective tax rate has been about 29 percentover the past five quarters. The new corporate rate falls to 21percent, starting this year.

Of the companies that have passed on savings to employees, mosthave done so in the form of one-time bonuses or increases in wagesfor the lowest earners.

Whether more companies will use tax savings to invest inretirement plans is unclear, says Gregg Levinson, a seniorretirement plan consultant at Willis Towers Watson.

“This is no doubt fantastic for these employees,” Levinson toldBenefitsPRO. “But in terms of a trend, we don’t know where this isgoing to go.”

The small cash bonuses some companies are offering will likelybe spent immediately and amount to little more than a sugar high interms of real capital and personnel investment, whereas the newinvestments in retirement plans will result in greater, long-termrealized economic benefits, said Levinson.

But as a consultant who spends much of his time advising plansponsors on how to improve retirement savings outcomes, Levinson isnot yet convinced that offering aggressive new match formulas is insponsors’ best interest.

“There is a hesitancy in my mind,” he said. “Tax reform mightchange and look like something entirely different two to four yearsfrom now.”

The new corporate rate is “permanent” in the sense that it isnot scheduled to sunset within the 10-year budget window.

Political majorities in Congress, however, are not. If Democratswere to gain control of Congress in the foreseeable future, the newtax law would not prevent them from passing legislation to increasethe corporate rate.

“On the one had, improving retirement plans is an excellentidea. But if in two years, or five years, the tax windfall driesup, and increased matches prove to be difficult to maintain, thenit could be really hard to pull back the increased contributions,”he said.”

Participants often perceive company 401(k) matches as expectedentitlements. Clawing them back is a position sponsors will want toavoid, said Levinson.

Still, the well-publicized moves that Visa, Aflac, and SunTrusthave made will no doubt force competitors to consider the value ofthe retirement benefits they offer, particularly if higherstandards continue to emerge.

Levinson says it is simply too early to calculate how tax reformand increased 401(k) matches could impact employee retention andacquisition trends as the labor market continues to tighten.

Increased matches will definitely earn good will with employees,said Levinson. But he cautions that health benefits, other fringebenefits, and base compensation packages tend to outweigh 401(k)plans when workers consider changing jobs.