401(k) plan history
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Here’s a timeline tracing how 401(k) defined contribution plans have become the largest employer-sponsored retirement savings vehicle.
1981: Internal Revenue Service regulations give employers the green light to set up 401(k) plans that allow employees to make pretax contributions to the plans. Benefits consultant Johnson Cos. sets up first plan.
1985: Number of participants in 401(k) plans crosses the 10 million mark.
1986: Congress, as part of broad tax reform legislation, slashes maximum 401(k) plan contributions employees can make while also tightening nondiscrimination tests.
1994: Congress passes legislation allowing employees called up from National Guard and other reserve units for active military service the right to make retroactive contributions to 401(k) plans when they return to work.
1999: Provision in a 1996 tax law takes effect exempting employers with generous matching contributions from running 401(k) nondiscrimination tests.
2001: Congress boosts maximum 401(k) contribution limit, allows employees age 50 and older to make extra “catch-up” contributions, and creates Roth 401(k) plans in which employees' aftertax contributions can earn tax-free interest.
2002: New law takes effect that requires employers to give 401(k) plan participants 30 days advance notice of blackout periods in which transactions cannot be conducted.
2006: Congress removes last obstacles blocking employers wanting to add automatic enrollment to their 401(k) plans.
2008: Number of 401(k) plans crosses the 500,000 mark.
2010: Employees enrolled in Section 457 plans — the public sector's equivalent of 401(k) plans — allowed to add Roth features to their plans starting in 2011 under legislation given final congressional approval.
