How Long Have 401(k) Plans Existed?

401(k) plans have been in existence since 1978 when they were established as part of the Revenue Act of 1978. This legislation included a provision, Section 401(k) of the Internal Revenue Code, which allowed employees to defer a portion of their salary into a retirement savings account on a pre-tax basis. Initially, these plans were designed to allow employees to save for retirement on a tax-deferred basis and were often used as supplemental retirement savings vehicles.

Over the years, 401(k) plans have evolved and become increasingly popular as a primary retirement savings vehicle for many Americans. They offer a range of investment options, potential employer matching contributions, and tax advantages that have made them a cornerstone of retirement planning for millions of workers.

While 401(k) plans have undergone changes and updates since their inception, their basic structure and purpose have remained consistent: to provide a tax-advantaged way for individuals to save for retirement through payroll deductions.

The information contained herein is not intended as financial, legal or tax advice, and may not be suitable as required by specific circumstances.  Please consult your financial planner, attorney and/or tax adviser as needed.