TITLE

'The Problem Isn't the 401(k)--the Problem is How to Invest It'

AUTHOR(S)
Benna, Ted
PUB. DATE
January 2003
SOURCE
Journal of Financial Planning;Jan2003, Vol. 16 Issue 1, p16
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
This article presents the answers of Ted Benna, the founder of the 401(k) plans in the U.S., to several questions about the plans. He was able to create the plans during the time when he was involved in a consulting project for a bank client and he kept returning to a section of the U.S. Internal Revenue (IRA) Code which allowed for new provisions effective January 1980. The idea of forced savings as great for employees intrigued him. That was how he created the 401(k) plans. He considered 401(k) a phenomenal success because there are about 45 million people better off with the 401(k) than without it. The greatest benefits of the 401(k) is that it enables spenders to become successful savers by making a priority. For most people, the reality is that they just would not save that money otherwise. Many try, and then get derailed when the roof needs to be replaced, or the car blows up, or Christmas comes along. The 401(k) will continue to be important as an accumulation vehicle, but the IRA will be even bigger in terms of actual dollars. What is significant about the IRA is that the money is clearly and unquestionably in the hands of individuals, not bound by employers' restrictions about how it can be invested.
ACCESSION #
8840882

 

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