Meet Ted Benna, the “Father of the 401(k)”

Motley Fool Answers

The Motley Fool

Taxes, Saving, Money, Investing, Planning, Retirement, Personalfinance, Finance, Education, Business

4.4 • 823 Ratings

🗓️ 7 December 2021

⏱️ 26 minutes

🔗️ Recording | iTunes | RSS

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Summary

Tens of millions of workers contribute to 401(k)s, thanks to a benefits consultant who got creative with a 1978 law. That consultant, Ted Benna, joins us to talk about how he came up with the idea, how he got Uncle Sam’s seal of approval, and the ways that Wall Street have abused the 401(k). He also discusses his new book, “401(k)s and IRAs for Dummies,” including why he thinks Roths are over-sold and his recommendations for retirement plans for small business and the self-employed.

Transcript

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0:00.0	This is Motleyful Answers. I'm Alison Southwick, joined as always by Robert Brokamp, personal finance expert here at The Motley Fool. In this week's episode, Broh sits down with Ted Bena. He's the father of the 401K. They're going to talk about how he came up with the idea and even got the U.S. government on board. Benna is also going to about his new book, 401Ks and IRAs for dummies and why he thinks
0:23.9	Roths are oversold and his retirement planning advice for business owners.
0:28.4	And because they had such a long chat, we figured all that and nothing more on this week's
0:33.5	episode of Motleyful Answers.
0:36.3	In 2020, 60 million Americans participated in a 401k plan,
0:40.8	according to the Investment Company Institute. And as of June of this year, those plans held more than
0:45.6	$7 trillion in assets. And that doesn't include the additional trillions that were in 401ks,
0:50.6	but have since been rolled over into IRAs. But when paragraph K was added to section 401 of
0:56.6	the IRS code back in 1978, the purpose was not to create an account that would be the foundation
1:01.7	of retirement savings for millions of Americans. In fact, the story of how 401Ks became so popular
1:06.8	starts with one man, Ted Bena, who is considered the father of the 401K. He's also the author of five books,
1:13.3	including the recently published 401ks and IRAs for dummies. Ted Bennett, welcome to Motleyful
1:19.2	Answers. Robert, it's definitely a pleasure to be here with you today. So thank you.
1:24.6	Sure, our pleasure as well. So let's set the scene. It's a Saturday in 1979 or 1980.
1:30.3	I've read differing accounts.
1:31.8	And you're in your office.
1:32.9	You were a benefits consultant back then.
1:34.8	And you were working on a project for one of your clients, which was a bank in the Philadelphia area.
1:39.8	What happened next?
1:42.8	Well, I was working on that project and working through what they wanted to accomplish
1:48.5	you without getting buried in details, I realized, you know, the best way to do that was to utilize
1:55.7	this section 401K. And as you mentioned, you know, that legislation was passed in 1978. It was only a page and
	...

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