Celebrating 40 Years of the 401(k)

The New York Stock Exchange welcomes Voya Financial (NYSE: VOYA) in celebration of the 401(k)’s 40th birthday. Charles Nelson, CEO, Retirement and Employee Benefits, joined by Chirs Taylor, Vice President, NYSE Listings and Services, rings the NYSE Opening Bell®.

The 401(k) turned 40 on November 6. Over the last four decades, this retirement plan has evolved in a number of ways—including by developing communication and education programs, call centers, advisory services, online account management and by integrating mobile and digital capabilities—to become the centerpiece of employer-sponsored retirement benefit programs.

The plan was created by the Revenue Act of 1978, four years after the Employee Retirement Income Security Act (ERISA) became law. Passed by the 95th Congress and signed by President Jimmy Carter on this date in 1978, the bill led to the addition of IRC Section 401(k), which allowed employees to defer taxation on the portion of income they elected to contribute.

For the celebration, the hosts invited the small group of guests—industry leaders, advisers, consultants and plan sponsors—to share their unique insights and perspectives about this milestone. The event included roundtable discussions about the health of the 401(k) industry, the impact of legislation and regulation on retirement policy, and reflections on the plan’s 40 years.

Bill Harmon, president of corporate markets at Voya Financial, and Alison Cooke Mintzer, editor-in-chief of PLANADVISER and PLANSPONSOR, led attendees in a roundtable analysis of the 401(k), examining its historical strengths and weaknesses and potential opportunities and threats (SWOT).

Celebration guests, including PLANADVISER’s Alison Cooke Mintzer, talk to a Citadel floor trader for Voya.

Attendees were optimistic about the opportunities for the plan, as well as for the surrounding industry, noting that an awareness of the plan’s weaknesses could generally be addressed.

“At Voya, we have been proudly supporting customers with their retirement goals for decades,” said Nelson. “Since they were created 40 years ago, 401(k) plans have evolved from a supplemental program to become a primary way that individuals and families save for their future. As we take a moment to celebrate the strong foundation and accomplishments of the system, let’s also recognize the opportunities we have to help even more employers and workers take advantage of important 401(k) benefits.”

According to the latest statistics from the Department of Labor (DOL), 401(k)s cover over 65 million workers, represent $4.4 trillion in savings and pay for over $385 billion in retiree expenses annually.