Ted Benna was working for an insurance firm outside Philadelphia about 40 years ago when he figured out how to use an obscure provision of a 1978 tax law—section “401(k)”—and turn it into an employee retirement account for contributions from both employees and employers. He designed it as a fringe benefit for banks that wanted to save taxes when they transferred bonuses to employees. In the years since, however, it’s grown into much more—it’s now the dominant way that Americans save for retirement, helping them collectively amass trillions.

Today, he’s proud that his invention has helped millions of people prepare for retirement. But the plain-spoken Pennsylvanian now says that the accounts have an “ugly” side—primarily that they have made mutual fund companies and investment managers rich off fees that grew way too high. He’s now on a crusade to design simpler plans with lower fees that put money in the pockets of future retirees, not money managers.

Ted Benna is commonly referred to as the “father of 401(k)” because he created and gained IRS approval of the first 401(k) savings plan.

 

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401K- Forty Years Later

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