Spare Change: To Observe a Day for 401(k)s, You Don’t Need to Buy a Card

Few people know who Ted Benna is, but everyone enrolled in a 401(k) plan — 55 million, according to the Bureau of Labor Statistics — should probably take a moment today to thank him.

That’s because today is “401(k) Day,” and in 1978 Mr. Benna, a Philadelphia employee-benefits specialist, stumbled across a provision buried deep in the tax code that led to the development of the tax-deferred retirement accounts.

Mr. Benna said he knew from the start that his discovery was big, but he never conceived of exactly how big it would become.

By 1999, 21 years after Mr. Benna’s discovery and 18 years after the first 401(k) plan’s debut, the total value of retirement savings invested in 401(k) plans was $1.7 trillion, according to the Profit Sharing and 401(k) Council of America, which represents companies that offer the accounts. The total passed the $2 trillion mark this year, according to the council.

The average 401(k) account had a balance of about $50,000 in 1999, the most recent year for which data were available from the Bureau of Labor Statistics.

Mr. Benna not only discovered the tax code’s section 401(k) but also came up with the employer-match feature, under which employers sweeten the pot by matching a portion of their employees’ savings — typically 3% to 5% of an employee’s salary, according to the council.

He included the match feature in the first-ever 401(k) plan, which he designed in 1981 for the Johnson Cos., a Philadelphia benefits consulting firm for which he then worked. The feature helped persuade lower-income employees to join the plan, he said. Their participation was crucial since the amounts higher-income workers could contribute was based on the number of employees who joined.

Five years ago the council — without an act of Congress or a presidential proclamation — designated the day after Labor Day as 401(k) Day to raise awareness of the accounts.

The Independent Community Bankers of America is encouraging its members to help their small-business customers offer 401(k) plans to employees.

Bill Reid, the president of ICBA Financial Services, said only a handful of companies with fewer than 100 employees offer 401(k) plans. This gives community banks a chance to carve out their own niche in the 401(k) market, he said, adding, “Small businesses and community banks are natural partners.”