The 'Father of the 401(k)' Has a New Idea to Get You Saving for Retirement

Ted Benna, the creator of the 401(k), is launching a new savings model aimed at lower and middle-income workers. This project, known as the Radish plan, shifts the burden of savings away from the employee paycheck and onto employer-funded contributions.

The core of the Radish plan is an employer-funded account linked to specific performance metrics like punctuality or safety goals. Because these contributions are not part of a standard wage, they offer tax advantages for both the business and the worker. Benna has long criticized the limitations of the traditional 401(k), noting that it primarily benefits high earners who possess the extra income required for salary deferrals. According to federal data, six in ten American workers currently lack access to any 401(k) retirement structure.

Employers using the Radish model can set specific participation benchmarks, such as rewarding employees for on-time arrivals. These funds sit in a money market account, providing a simple, accessible safety net for participants. Unlike traditional 401(k) accounts, which are often difficult for lower-income households to fund consistently, the Radish plan requires no out-of-pocket contributions from the worker.

While the model is designed for flexibility, it remains a formal retirement vehicle. This means federal regulations on early withdrawals still apply, including standard tax treatment and a ten percent penalty for accessing funds before age fifty-nine and a half. The plan is limited to workers earning one hundred fifty-five thousand dollars or less annually, ensuring the benefit reaches the specific demographic Benna identified as underserved.

Adoption of the new plan is in the early stages. Radish has a small number of clients and is currently launching a pilot program with a trucking firm. While the 401(k) became a cornerstone of American finance, Benna faces a challenging path to achieve similar scale with his new initiative. Business owners interested in the program can contact the organization directly to review plan setup requirements.