401k Day Celebrates Creativity, Independence, Entrepreneurship

National 401(k) day was Sept. 6.

It is likely the date came, went and you did not know about it.

This valuable program is worth highlighting not only because it is now a key part of our retirement but also our life planning.

There are currently 100 million 401(k) retirement accounts holding $6.2 trillion in total retirement assets according to the most recent Federal Reserve Data. There are more than 55 million Americans participating in 401(k) plans, holding $5.67 trillion in total retirement assets at the end of first quarter 2019.

This, according to the most recent Federal Reserve Data. See 401k Specialist Magazine.

By the way, in 2017, there were $4.8 trillion in assets held in 401(k) plans — an appreciation in just two years that indicates the incredible power of a strong economy, market appreciation and regular employee contributions with employer matching. Even millennial workers contending with lower salaries and high student debt are contributing in increasing number, with 82 percent of eligible workers age 21 to 34 making contributions to a plan, exceeding Generation X (77 percent) and baby boomers (75 percent) according to a Bank of America/Merrill Lynch, 2017 Plan Wellness Scorecard.

Refer to the American Benefits Council.org site publication.

The evolution of this powerful idea came down to one man:

In 1978, Ted Benna, a benefits consultant from Philadelphia was designing retirement plans for senior corporate executives and reviewing a congressional law when he realized his own interpretation of paragraph 401(k) could benefit the smaller employee.

Without relying on politics and politicians, Benna found an opportunity for middle-class Americans to set aside retirement savings.

Many people were skeptical because it was only one professional planner’s idea which could easily run afoul of the IRS.

But the IRS confirmed Benna’s interpretation of the code.

Now 401(k)s have replaced pensions as the dominant defined contribution vehicle for retirement savings.

Just in time, as private sector defined benefit pensions are a rapidly decreasing part of America’s retirement savings.

IRAs, established by legislation passed in 1974, have assets totaling almost $9.2 trillion. Anyone with earned income can contribute but these vehicles have no employer matching function like a 401(k).

As Scott Rasmussen writes in "The Sun is Still Rising," specifically in the chapter "Power of Community," (at p.24): "Benna was not looking to change the world. He was serving his clients and looking for opportunities for Middle America.

"Without a single vote cast, he transformed the world of retirement planning."

A reminder of the special importance of creative individuals, independent groups and problem solving organizations that make our country’s vibrant democracy work.

Clara Del Villar is Director of Senior Initiatives at FreedomWorks Foundation. Her financial industry career included senior roles in Investment Management, Private Asset Management, and Capital Markets. Her entrepreneurial ventures involved digital media as Founder, CEO of The Hispanic Post; energy tech as founder of InEnergy and health tech. She is a former advisor at 60Plus Foundation. Currently, she is a Board Director at General American Investors Co. and Executive Committee of Weill Cornell Women’s Health Symposium. She earned a BSFS at Georgetown University. To read more of her reports — Click Here Now.