Ted Benna is known as the father of the 401K. How it all started...
The 401K was passed into law in the fall of 1978. It was actually intended for a different purpose. The question is, how did it become the retirement vehicle of choice? Ted found a hole in the way the code was written and he came up with his interpretation of that wording. His approach was to design a retirement plan that the employer would match pre-tax dollars with the employee.
Before he discovered this mis-interpreted code it was believed that an employer couldn't contribute tax free dollars to the employee's plan. So it was never utilized for it's intended purpose because it had no benefit to the employee. His discovery of this hole made that possible because it did not say that it couldn't be done. He then brought it to light and the 401K was born. The first plan was written Jan 1, 1981 with his own firm of about 60 employees.
Unlike Social Security, the 401K was designed as a supplemental retirement plan that was supposed to help individuals save for their future. Because of its design, it's filled with major flaws that most financial planners or institutions just don't understand or inform the investor of. The plan is filled with all kinds of fees and follows the volatility of the stock market. Yes, if the market is doing great, so will your plan. BUT, if the market crashes, so will your plan with very little chance of a decent recovery.
Mr. Benna is now trying to educate us on the misconceptions and the inconsistencies that are now coming to a head for most retiree's that are now receiving a dismemberment. Since the contributions go in pre-tax or tax deferred, the payout must come out with the current income tax rate and that also depends on your tax bracket.
So, given the history of the stock market since the beginning of the 401K, it's probably safe to say that most people have actually lost money as a result.
There is a better way that's been around since the 19th century and has been used by the wealthiest people in the world and still being used today to shelter hard earned money from the IRS.
Watch the video below to see how your 401K or qualified IRA is NOT helping you for your retirement future.
If this article was helpful to you, I want to know. Please leave a comment below because I really want to hear your opinion.