Congress passes the Revenue Act including Section 401(k), allowing employees to defer compensation and avoid taxation until withdrawal. This provision was largely unnoticed at the time but would revolutionize retirement savings.
The Johnson Companies creates the first 401(k) savings plan, designed by benefits consultant Ted Benna. This marked the beginning of the shift from defined-benefit pensions to defined-contribution plans.
The IRS releases final regulations clarifying how employers can implement 401(k) plans. This opened the door for widespread adoption of salary deferral arrangements.
Major tax reform reduced IRA contribution limits and made 401(k) plans more attractive by comparison. Included nondiscrimination testing requirements to ensure plans benefit all employees fairly.
Department of Labor issues regulations protecting employers from liability for investment losses if employees have control over their investment choices. This encouraged more diverse investment options in 401(k) plans.
Created the SIMPLE 401(k) for businesses with 100 or fewer employees, making it easier for small businesses to offer retirement benefits. Also introduced the Roth IRA concept.
Increased contribution limits and created the Roth IRA, setting the stage for future Roth 401(k) options. Enhanced portability rules for rolling over retirement accounts.
EGTRRA significantly increased contribution limits and introduced catch-up contributions for workers age 50 and older. Also expanded vesting rules and made plans more portable.
Workers age 50 and older become eligible to make additional catch-up contributions beyond standard limits. Initial catch-up limit was $1,000.
Employers gain the ability to offer Roth 401(k) accounts, allowing employees to make after-tax contributions with tax-free qualified withdrawals. Combined the benefits of Roth IRAs with higher 401(k) contribution limits.
Made automatic enrollment and automatic escalation features permanent, dramatically increasing participation rates. Also established qualified default investment alternatives (QDIAs) like target-date funds.
The age for required minimum distributions increased from 70½ to 70½ (maintained), but later legislation would change this further.
Temporarily waived required minimum distributions for 2009 due to market crashes. Also made Roth 401(k) provisions permanent rather than set to expire.
Enhanced safe harbor provisions made it easier for employers to automatically enroll employees with legal protections. Automatic enrollment became increasingly common.
Employees gained the ability to convert traditional 401(k) balances to Roth 401(k) within the same plan while still employed. This provided greater tax planning flexibility.
Changed IRS notice requirements and made it easier for small employers to band together for multiple employer plans (MEPs).
Raised required minimum distribution age to 72, expanded access for part-time workers, and enhanced multiple employer plans. Eliminated the stretch IRA for most non-spouse beneficiaries.
COVID-19 relief allowed penalty-free early withdrawals up to $100,000 and waived 2020 required minimum distributions. Also increased 401(k) loan limits temporarily.
Comprehensive retirement reform raising RMD age to 73 (2023) and 75 (2033), requiring automatic enrollment for new plans, increasing catch-up limits for ages 60-63, and allowing employer matches on student loan payments.
Under SECURE 2.0, the required minimum distribution age increased from 72 to 73 for those not already required to take distributions.