Editing 401(k) (section)

==History==
Before 1974, some U.S. employers had been giving their staff the option of receiving cash in lieu of an employer-paid contribution to their tax-qualified retirement plan accounts. The U.S. Congress banned new plans of this type in 1974, pending further study. After that study was completed, Congress reauthorized such plans, provided they satisfied certain special requirements. Congress did this by enacting Internal Revenue Code Section 401(k) as part of the [[Revenue Act of 1978|Revenue Act]].<ref>See section 135(a) of the [[Revenue Act of 1978]], Pub. L. No. 95-600, 92 Stat. 2763, 2785 (6 November 1978).</ref>  This occurred on 6 November 1978.

The first implementation of the 401(k) plan was in 1978, about three weeks after Section 401(k) was enacted, before the Revenue Act of 1978 even went into effect. Ethan Lipsig, of the outside law firm for Hughes Aircraft Company, sent a letter to Hughes Aircraft outlining how it could convert its after-tax savings plan into a  401(k) plan.<ref>{{cite web |title=History of 401(k) Plans: An Update |url=https://www.ebri.org/docs/default-source/fast-facts/ff-318-k-40year-5nov18.pdf |website=Employee Benefit Research Institute |date=5 November 2018}}</ref>

Ted Benna was among the first to establish a 401(k) plan, creating it at his own employer, the Johnson Companies (today doing business as Johnson Kendall & Johnson).<ref>{{Cite web|url=https://jkj.com/about/|title=About Johnson, Kendall & Johnson}}</ref><ref>{{Cite web|last=Olshan|first=Jeremy|title=The inventor of the 401(k) says he created a 'monster'|url=https://www.marketwatch.com/story/the-inventor-of-the-401k-says-he-created-a-monster-2016-05-16|access-date=7 February 2021|website=MarketWatch|language=en-US}}</ref> Benna was trying to reduce the taxes due on an deferred-compensation bonus plan for bank executives, at a time when the top marginal income tax rate was 70%.<ref>{{cite news |newspaper=[[The New York Times]] |title=Was the 401(k) a Mistake? |author=Michael Steinberger |date=8 May 2024}}</ref> Employees could contribute 25% of their salaries, up to $30,000 per year, to their employer's 401(k) plan.<ref>{{cite news |title= Deferred income guarantees before-tax dollars are saved |work= Providence Journal |location= Providence, Rhode Island |date= 14 February 1984 |first= Steve |last= Winter |page= B5 |url= http://infoweb.newsbank.com/iw-search/we/InfoWeb?p_product=AWNB&p_theme=aggregated5&p_action=doc&p_docid=1525C18197AC5168&p_docnum=4&p_queryname=13 }}</ref>