Add up the market valuation of Apple Inc. (NASDAQ: AAPL), all the cryptos in the world and entrepreneur Jeff Bezos’s fortune, and you get to over $3 trillion.
But one 80-year-old man has created something bigger than all three of these combined.
These days, he shuns the spotlight and lives on a modest farm in rural Pennsylvania. You would never guess the farm’s owner set in motion a $5 trillion force that grows each fortnight.
It’s a comfortable enough retirement, but Ted Benna has some regrets.
“I created a monster,” he said in 2016.
The Tax Loophole Transforming 50 Million Retirements In the fall of 1980, Benna was a workplace benefits consultant who noticed a loophole in the U.S. tax code.
As it was originally written, section 401(k) limited executives’ use of cash-deferred plans. But Benna saw that the section could be interpreted to let employers deduct a portion of their employees’ salary from paychecks pretax and direct it to their retirement fund.
“I had only one thought at the time,” Benna recalled. “How could I make this sucker fly?”
The concept of the 401(k) had some hurdles to overcome. The Internal Revenue Service still had to bless Benna’s interpretation of the tax code. And many big consulting firms dismissed the idea as a scam.
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But the idea caught on. By the mid-1980s, half of all firms either offered or were considering offering 401(k) plans to their workers. By 1990, 401(k) plans had $384 billion in assets and 19 million active participants.
Today, 50 million Americans have 401(k)s.
And for stock markets around the world, this is an enormous deal.
Source: yahoo.com
Photo Credit: istock-arthon-meekodong
Categories: Pennsylvania, Business