My response to my affluent Republican brother... How 401(k) Plans Work" In 1978, Congress decided that Americans needed a bit of encouragement to save more money for retirement.
They thought that if they gave people a way to save for retirement while at the same time lowering their state and federal taxes, they might just take advantage of it. The Tax Reform Act was passed. Part of it authorized the creation of a tax-deferred savings plan for employees.
News.