## Overview The 401(k) is not an organization, but rather a type of employer-sponsored retirement savings plan defined by a section of the U.S. Internal Revenue Code. It allows employees to contribute a portion of their salary on a pre-tax basis, with funds invested for growth over time and taxes deferred until withdrawal in retirement. Employers often match employee contributions, further incentivizing participation. This defined-contribution model places investment risk and responsibility on the individual, rather than the employer, marking a significant shift from traditional pension (defined-benefit) plans[2][4]. ## History The 401(k) originated with the Revenue Act of 1978, which introduced Section 401(k) to clarify the tax status of profit-sharing plans[1][3]. The provision was initially a technical adjustment, but benefits consultant Ted Benna recognized its potential and developed the first modern 401(k) plan in 1981[1]. Prior to this, Cash or Deferred Arrangements (CODAs) allowed some deferral of income and taxes, but lacked the structure and popularity of today’s 401(k)[1]. The Employee Retirement Income Security Act (ERISA) of 1974 laid important groundwork by regulating employer-sponsored plans and introducing Individual Retirement Accounts (IRAs), but the 401(k) revolutionized retirement saving by making employee contributions central[1][4]. ## Key Achievements The 401(k) helped democratize retirement savings beyond pensions, which were historically available to a smaller segment of the workforce[2]. By the 1990s, it had become a cornerstone of American retirement planning, with automatic enrollment and employer matching bolstering participation rates[3]. The shift to defined-contribution plans gave employees more control over their investments and portability between jobs, addressing some limitations of traditional pensions[4]. ## Current Status Today, 401(k) plans are a standard benefit for full-time employees in the U.S., often viewed as essential for attracting an
#trump #executive_order #retirement #alternative_assets
President Donald Trump has signed an executive order allowing 401(k) plan sponsors to offer private equity funds, real estate, and cryptocurrency as investment options.