Ted Benna Criticizes Complexity of 401(k)s and Proposes Simpler Retirement Savings Alternative
Ted Benna, known as the father of the 401(k), is now critical of the retirement plan he helped create four decades ago. He argues that while it has benefited high-income earners, lower- and middle-income workers are not seeing adequate returns due to costs, complexity, and low participation rates. Research indicates employer subsidies in 401(k) plans disproportionately favor top earners, with nearly half of such benefits going to the highest-paid employees. Additionally, many eligible workers do not participate at all or withdraw funds during financial hardship. Benna believes this has exacerbated retirement inequality before being compounded by recent economic challenges. To address these issues, Benna co-founded Radish, a new employer-funded savings program designed for lower-income workers that rewards performance with tax-advantaged contributions directly into employee accounts.