Joining us now is financial expert and cocreator of Radish, Ted Benna. Ted, explain to us

what this is about, and what did you see as the inherent problem with the current

state of the four zero one k?

Well, the problem, Christina, is it's, reached a point now where many middle and low income

employees can't afford to have money taken out of their paycheck. And, you know, what with

cost of living, you know, housing, you know, education, medical care, food, etcetera. Even when they

have the opportunity, they just can't afford to do it. So, you know, I came up

with this new plan, you know, as a way to help middle and low income employees

because it's solely employer funded. And, you know, rather than being a plan that's intended to

help, you know, twenty, thirty years from now, employees can have access to it when they

have financial need. So if they need 500 or a thousand dollars to, you know, repair

a car to be able to get to work or for medical expenses, of other significant

financial needs, yeah, they can dip into it and take money to provide for those type

of needs.

I mean, that makes sense because, you know, I've been through phases of my life where

I thought it really made more sense for me to have the liquidity rather than put

it in my four zero one k because there were bills, there were uncertainties. So is

there there's no penalty when you need to take those funds out?

Well, there there will be a 10% penalty like other qualified plans unless it, you know,

meets one of the exemptions, like, you know, buying a new home Right. You know, education,

medical expenses, those types of things. But, Christina, what happens is the employer contribution goes in

pretax. So as a result, neither of the employer or the employees pay FICA tax on

it. So, you know, that's 7.65%. So if the employee has to take it out and

pay the 10% tax, it's not that big a difference. You know, in some states, the

withdrawal from retirement account may be exempt from state tax. Yeah. So in those type of

states, you know, the employees actually end up paying, you know, no more or maybe even

less tax than if they got paid cash compensation.

I I wanna ask you to kind of get retrospective if you're if you're willing to.

And and as you were designing what became the four zero one k, if if if

the way that it's played out is in line with what you expected. In other words,

this is something that I think benefits a lot of Americans who are kind of middle

or higher end earners. Obviously, those who are are not able to access it. Is that

something that you foresaw or forecasted would would happen here? How is the level of access

that we've seen? Yes. The level of level of adoption as well kind of matched with

what you anticipated when you were creating that first product so many decades ago?

Well, I think four zero one k definitely worked the way anticipated. You know? Since its

inception, it's probably helped workers accumulate about $15,000,000,000,000 or so when you count, you know, all

the money that's been rolled out in the IRAs and taken as benefits and so forth.

And it, you know, played a big role in helping turn lower paid employees and from

spenders into savers. But, you know, we've reached a point now where that's changed where many

just can't afford to have money taken out of their paycheck. You know, they have no

assets. You know, they have absolutely nothing. And many of them have negative, you know, credit

card debt with high interest rates and, you know, a lot of financial stress that, you

know, they have to deal with.

How has the feedback been for this new project? Because it does put the onus, obviously,

more on employers. What is the benefit to them for engaging in this kind of product?

I know they can reward good behavior, things they like to see from employees. What's the

feedback then, and do you think it will get adopted by enough companies to make it

viable?

We're we're getting some employers to adopt in quite a bit of interest, and, your trucking

industry is one example. And, you know, there, for the drivers, typically, they're interested in is

safety, on time delivery, maybe, you know, for shorter term haulers, you know, one more delivery

a week and whatever. So the employer is able to set whatever incentives the employees have

to meet in order to get the contributions. And so the benefit to the company is

to improve performance, potentially, you know, reduce turnover a bit, you know, those types of things.

And, you know, for the employees is to give them additional financial security.

I wanna go back to something you mentioned a moment ago, which is kind of developing

saving habits or becoming a a saver. And I'm curious what you've learned over your career

about that particular kind of of psychology. So, obviously, the four zero one k has had

an impact on that. People are thinking more seriously, I think, largely about saving for for

retirement. I know that that's an ambition of this new project as well. Yes. There's an

incentive here for employers to have employees who have good habits and do good work. Talk

a bit about sort of your your thinking when it comes to how you foster a

savings psychology in workers' stay. What what works in that regard?

We're we're definitely four zero one k and now that, you know, the state mandated IRA

plans are a big step in that because, you know, it it requires employees, you know,

to take money out of their paycheck before they have the opportunity to spend it. And

I know for me personally, many younger employees over the years, you know, retirees as well

have said, hey. Look. I wanna thank you, you know, for making this available, but because

I would have never been able to do this on my own, you know, if I

had to do it without the four zero one k.

I'm wondering what your advice would be to some people on the younger side. When I

got my first full time job, I remember all the guys in the office gotta max

it out. Max out that 401 k. The company matches. This will set you up. You

gotta do it. You gotta do When I talk now to people in their twenties who

do have full time job, they are reticent to pour a bunch of money into something

like a four zero one k because they're just not sure that that program, the system

we know it is going to be there when they need it decades from now, what

would you say to them? Is that a safe bet still if you can do it,

or do they have a right to think there's more risk there than there used to

be?

Well, the plan, you know, is gonna be there as far as the money they have

put in it. Longer term, Christine, whether, you know, things happen to make four zero one

k's, you know, be less attractive and for employers to not maintain them, which certainly is

a possibility, that wouldn't affect the money that's already been accumulated. So for younger workers, there's

no reason for them to be concerned now about the fact that, you know, five, ten,

twenty years from now, they may not be able to put money into the plans, you

know, have the kind of benefits, you know, going forward they that they have now.