The History and Inadequacy of the 401(k): What Went Wrong with America's Retirement Plan

When the 401(k) was introduced in the late 1970s, it wasn’t meant to replace pensions—it was meant to supplement them. Born out of a little-noticed section of the Revenue Act of 1978 (Section 401(k)), it allowed employees to defer compensation tax-free into a retirement account. The idea was simple: give workers a tax break for saving, and employers a lower-cost benefit option.