401k Father Ted Benna Disowns Them

Posted on by Forest in Investing, Saving Money & Finances

401k Father Ted Benna Disowns Them – When Ted Benna started offering the 401k a little over 30 years ago he didn’t realise that his little tax loophole system would become what it has to the American retirement dream.

401k Father Ted Benna Disowns Them

Ted Benna became known as the father of the 401k for his work in bringing plans to people to help them save for retirement based on the 401(k) section of IRS code. Essentially a loophole that could allow employees to save for retirement with huge tax benefits. The systems were supposed to be simple, much like pensions, and for quite some time that was exactly how they stayed.

401k Father Ted Benna Disowns Them

However Ted Benna recently spoke out about the ‘monster’ he created saying he was proud to be the father but that the system had gotten too complicated. Maybe he didn’t so much disown his creation but he does seem to be wishing that the simplicity had not been lost.

Benna feels that the myriad of complex options and the way the system works needs legislation to help people use the plans correctly. He is advocating for mandatory enrolment, no option to cash-out when changing jobs and for a 1 percentage point contribution increase per year. He thinks this could be achieved through legislation. I am sure as a regular person you find trying to understand a 401k quite difficult!

He thinks the plans are great but only really of benefit to people who stay long term with a job (20-30 years) and as the creator I guess we should be taking his concerns and comments seriously.

I think whenever anything gets too complicated it ends up in problems for a large percentage of users. Sure for those people that can really grasp it the benefits may be huge but it is supposed to be something for the general populous and I think Benna’s suggestions may make the system perform a lot better overall. I know maybe making things mandatory isn’t the right way but making 401k retirement plans highly encouraged and with a stronger emphasis on choosing risk-free routes for people who don’t have the full knowledge of the market really could save some people from poor decisions.

More about Benna’s comments can be read on MSN.

What do you think about Ted Benna’s comments? Is he over-the-hill and not understanding the modern market or do you think he is trying to do the right thing? Do you have a 401k and do you fully understand where you money is going and what it is doing?

I look forward to your thoughts and feedback.