401(k) Creator Launches Radish Plan for Workers Earning Under $155,000 as Pilot Starts With 200 Employees
Updated
Updated · Money · Aug 4
401(k) Creator Launches Radish Plan for Workers Earning Under $155,000 as Pilot Starts With 200 Employees
3 articles · Updated · Money · Aug 4
Summary
Ted Benna is pitching Radish as an employer-funded, tax-advantaged savings account for low- and middle-income workers, with a 200-worker trucking company set to test the plan in coming months.
The plan lets employers reward attendance, safety or performance with contributions that do not come from workers’ paychecks, while employers avoid payroll taxes and workers defer taxes until withdrawal.
Radish is limited to employees earning $155,000 or less and can sit alongside a 401(k), with funds held simply—typically in a money market account—and later rolled into a 401(k) or IRA.
Early access is more flexible than a 401(k) because employers can define eligible hardships, but withdrawals before age 59 1/2 still face federal income tax and a 10% penalty.
Benna says the idea targets gaps left by 401(k)s, which now hold more than $9 trillion for 70 million Americans even as about 6 in 10 workers still lack similar retirement accounts.
The 401(k) creator says his invention is failing the working class, but can his new employer-funded alternative truly fix the retirement wealth gap?
With hardship withdrawals hitting record highs, is the traditional 401(k) system quietly pushing hourly wage earners further away from actual financial security?
Since top earners capture the vast majority of tax benefits, have 401(k) plans accidentally become a disguised wealth-building loophole for the rich?