Modern finance · 1950s–1990s
1978
Section 401(k) and the employer match
A short paragraph in a tax law becomes America's main way to save for retirement.
The Revenue Act of 1978 added section 401(k) to the tax code, taking effect in 1980. It was meant to settle how certain bonus and profit-sharing plans were taxed.
A benefits consultant, Ted Benna, saw that it could let workers save part of their pay before tax, and designed a plan with an employer match to encourage them. After the IRS issued rules in 1981, companies adopted 401(k) plans quickly, and they gradually replaced traditional pensions at many employers.
💡 Why it made sense then
Employers wanted cheaper, more predictable costs than pensions, and a match gave workers a reason to save.
🎮 In Journey Shares
The daily bonus is the game's free money: step 2 of the money plan is to claim it, like taking the full match.
Ideas it gave us
- 🧭 401(k)
A 401(k) is a US retirement account offered through an employer. You invest part of each paycheck, with a tax break now (traditional) or later (Roth), and the money is meant to stay until retirement.
- 🧭 Employer match
An employer match is money your employer adds to your retirement account when you contribute, such as 50 cents for each dollar you put in, up to a set share of your pay.
Practise with $10,000 in play money
Free. No real money involved.