Creator of the 401(k) has a new plan to help low-income workers save for retirement

Ted Benna is credited with creating the 401(k), the ubiquitous retirement savings plan that supports millions of workers on their path to retirement. But even he recognizes that the outlook around retirement may need some adjustments. 

"I was thinking about those who still aren't able to save for the future, like hourly employees or college graduates," Benna says. "Most employees down at this level still need help dealing with their financial matters." 

While 73% of employees have access to a retirement plan through their employer, not everyone has the means to start saving into it. Forty-one percent of employees do not make any contributions into their retirement accounts, according to a survey by CNBC. Common financial barriers include student loans and other debts, low income and inflationary pressures, according to data from Bankrate. 

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Benna's new concept, called the "Wheat Grains Incentive Plan," would acknowledge the needs of low-income workers, younger employees who are just starting out, and other hourly wage earners like warehouse staff and delivery drivers with a monthly incentive in the form of "wheat grains." At the end of the month, the grains would be invested into a money market account and grow tax-deferred, similar to a 401(k), Benna suggests. 

"I grew up on a farm and you sow a seed, that seed grows and produces more seeds — that's the concept," he says. "This is another way to give value to employees. Employer contributions become a tax-deductible contribution to the qualified retirement plan, since contributions to retirement plans like bonuses are not compensation." 

Employers could decide on the incentive amount — be it a flat rate or a percentage of their compensation — with Benna envisioning a typical balance of $500 to several thousand dollars accruing over time. If the account continues to grow, employees would have the option to roll the funds into a 401(k) or IRA. 

Benna sees advantages for large employers like Amazon in their warehouse or trucking sectors, or fast food franchises in utilizing these incentives for workers. While the plan is not currently available for employers yet, he hopes to partner with a retirement plan provider in time. 

"We'll hopefully start to get a little traction with this as information gets out there," he says. "Employers have a tendency to sit back and wait to see what happens, but this could certainly be something else to help employees." 

Read more: From Starbucks to cash cards, small perks can boost 401(k) enrollment

Benna says his original 401(k) concept has been unfairly described as a "plan for the wealthy." While he doesn't agree, he does acknowledge that employees at all levels and financial readiness can benefit from innovative thinking around best practices for savings. 

"401(k)s help turn spenders into savers by making saving the first priority. A lot of participants have told me, 'I wouldn't have been able to retire without this'" Benna says. "The [Wheat Grain plan] is a more modest way for employers to help those on the lower end who could use some help."