The Man Who Invented the 401(k), Revolutionizing Retirement

In the late 1970s, a quiet man from rural Pennsylvania made a discovery that changed the way millions of Americans would save for retirement. His name is Ted Benna—and he’s known today as the “father of the 401(k).”

Benna didn’t set out to change the financial world. Born around 1943, he grew up working on his family’s modest farm in Northcentral Pennsylvania. He later attended Moravian College and earned a master’s degree at Drexel University. By the late 1970s, he was working as a benefits consultant, helping companies design retirement plans for their employees.

At the time, most Americans who received retirement benefits had traditional pensions—plans that guaranteed a fixed income in retirement, paid for entirely by their employer. These were managed by the company, not by individual workers. But that model was expensive and complex, especially for smaller companies.

In 1978, Congress quietly added a small section—called 401(k)—to the Internal Revenue Code. It was meant to give companies a way to delay taxes on certain employee bonuses. It wasn’t written with everyday workers in mind, and no one thought it would change how people saved for retirement.

But Benna saw something others didn’t.

While working with a banking client in 1980, he realized that the new rule could be used in a different way. Instead of just helping top executives reduce their taxes, it could let all employees contribute a portion of their salary to a retirement plan—before taxes were taken out. Employers could then add matching contributions to encourage workers to participate.

He designed a plan based on that idea and submitted it to the Internal Revenue Service (IRS). In 1981, the IRS approved it. The first official 401(k) plan was born, and it launched at Benna’s own company, The Johnson Companies.

Soon after, the concept exploded in popularity. Companies liked the 401(k) because it was cheaper and less risky than traditional pensions. Workers liked the idea of growing their retirement savings through investments—especially with employer matches that felt like “free money.” What began as a small tax idea grew into the largest retirement savings system in the U.S.

Today, 401(k) plans hold more than $7 trillion in assets and serve over 60 million workers. Traditional pensions are now rare in the private sector, largely replaced by this model that Benna helped create. His work reshaped retirement in America, giving individuals more control—but also more responsibility and risk.

Benna left The Johnson Companies in the 1990s and started his own consulting firm. He later founded Benna 401(k), LLC, which focuses on helping small businesses set up affordable retirement plans without the confusion that often comes with big financial providers.

He’s also the author of five books, including 401(k) For Dummies and 401(k) – Forty Years Later. Over the years, Benna has invented other financial tools too, such as the “Wheat Grains Incentive Plan,” a creative approach to employee rewards.

Now in his early 80s, Benna lives quietly on a farm in Pennsylvania—back where he began. He spends time fundraising for Compassion International, a charity that supports children in need around the world.

Even as he looks back proudly on what the 401(k) has achieved, Benna isn’t afraid to criticize its flaws. He’s spoken out about high fees, the system’s heavy reliance on stock market investments, and how it “opened the door for Wall Street to make even more money.” He also regrets how it helped push out pensions, especially for workers who now must manage their own retirement funds.

Still, he stands by the value of the 401(k), especially for middle-class savers who didn’t have many options before. “It gave millions of people a way to build retirement savings that they never had before,” he has said in interviews.