Inventor Defends 401(k) Plans
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STATE COLLEGE, Pa. (AP) _ The man who developed the first 401(k) plan 22 years ago says it’s still a great way to plan for retirement, despite the Enron Corp. crash.
Ted Benna said he thinks workers and businesses should try to fix any 401(k) problems, and that Congress should intervene only if the companies cannot or will not do so.
``What is unfortunate here is that a relatively small number of plans are giving the 401(k) a black eye,″ Benna said.
Of the roughly 400,000 401(k) plans in the United States, only about 100 have caused problems, Benna said.
The key to a successful 401(k) is diversification, Benna said. People who invest large portions of their money in their own employers’ stock, as many Enron workers did, face serious risks, he said.
Benna also said workers nearing retirement should limit their exposure to stocks.
Benna said he always expected the retirement plan to do well, but he never thought there would be 40 million workers having $1.5 trillion in the plans.
``I knew the 401(k) was going to be big, but I’m not that bright,″ Benna said. ``Given the dynamics, I thought maybe billions, not trillions.″