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Introduced in 1978 by the passage of the Revenue Act by Congress, the 401(k) is now more than 40 years old, and the first people who have saved via a 401(k) for their entire career are hitting retirement. This dynamic shines a light on a significant gap in the American retirement savings ecosystem, namely that employees who work for small businesses have been largely excluded from what is now the country’s primary retirement savings vehicle.

The 401(k) was quickly adopted as a recruiting incentive by large companies competing for top talent, but they were prohibitively expensive to set up and administer for smaller companies. While more than 90 percent of employers with more than 500 employees offer a 401(k), nearly the opposite is true for employers with less than 100 employees. Only 12 percent of those companies offer their employees a 401(k) option.

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