Richard Stanger was a primary author of a little-noticed piece of a 1978 tax law.
At the time, Bloomberg’s Richard Rubin and Margaret Collins report today, “the 869-word insert was lost in the political heat of limits on tax-deductible three-martini lunches, lower capital gains rates and a bipartisan coalition that was rejecting President Jimmy Carter’s proposals.”
Today, 401(k) is the most recognizable number in the Internal Revenue Code.
“As the first 401(k) generation ages — about 10,000 baby boomers turn 65 every day in the U.S. — questions multiply about the adequacy of their finances,” Rubin and Collins note. “Just last week, President Barack Obama proposed a new retirement plan for Americans who don’t have 401(k) plans at work as he warned that Social Security often isn’t enough to rely on.”
How 401(k) grew from an insignificant provision into a behemoth that transformed retirement savings and started an industry that holds $4 trillion in Americans’ assets is a study in the sometimes unintended consequences of Washington action.