At a Glance | November 5, 2018 The Rise of the 401(k) Plan Zero to $5.28 trillion in 40 years Section 401(k) of the Internal Revenue $5.28 Trillion 1 Code allows employees to set in 401(k) Assets aside a portion of their compensation into a qualified retirement plan with certain tax advantages and possible employer contributions. 65.3 Million 2 Active Participants (2015) 1978 1983 1988 1993 1998 2003 2008 2013 2017 ‘70s ‘80s ‘90s 2000s 1978 1981 1992 2001 Denton brings its first 401(k) The Revenue Act of 1978 The IRS proposes Section 404(c) of the Em- Among its many fee lawsuits. includes a provision that regulations on 401(k) ployee Retirement Income provisions, the Economic becomes Internal Reve- plans sanctioning Security Act was issued, Growth and Tax Relief 2010 nue Code (IRC) Sec. 401(k). the use of employee providing that fiduciaries Reconciliation Act of 2001 The Department of Labor salary reductions as a may be relieved of liability (EGTRRA) allows issues 404(a)(5) participant 1979–1982 source of retirement for participants’ invest- additional “catch-up” disclosure rules. Several companies, plan contributions. ment decisions under contributions by including Hughes Aircraft certain conditions. participants ages 50 2012 Company, PepsiCo, 1982 and older and establishes The Department of Labor Johnson & Johnson, The first 401(k) plans 1996 Roth accounts. issues 408(b)(2) service JC Penney, and Honeywell, officially begin. The Department of Labor provider disclosure rules. begin the process of issues Interpretive 2006 adopting 401(k) plans. Bulletin 96-1: Participant The Pension Protection 2016 Investment Education. Act of 2006 (PPA) A Department of Labor sur- facilitates employers’ vey found that 62 percent of 1998 automatically enrolling workers had access to some The IRS permits a plan workers into plans. type of defined contribution to use “negative plan, most likely a 401(k) elections” (i.e., automatic Separately, the law firm of plan. Of those with access, 72 enrollment). Schlichter Bogard & percent were participating. 1. The 2017 assets value is from Investment Company Institute, “The US Retirement Market, Second Quarter 2018.” 2. Since 2005, active participants include any workers currently in employment covered by a plan and who are earning or retaining credited service under a plan. For 2004 and earlier, active participants were adjusted to exclude individuals who were not contributing to the retirement plan and not entitled to receive benefits. Source: Department of Labor Form 5500 private pension plan data, 1975–2015. © 2018 EBRI