NEWTOWN, Pa. — Edwin T. Johnson, who led the employee-benefits consulting firm often credited with creating the first 401(k) plan, the workplace-based savings program that today accounts for $3.4 trillion in retirement savings, has died. He was 82.
He died Aug. 23 at his home in Newtown, according to a death notice . The cause was prostate cancer, which he battled for 22 years.
Mr. Johnson was founder and chief executive of the Johnson Cos., a consulting firm in Newtown that played a key role in refashioning retirement savings in the 1980s. While an employee of his, Ted Benna, became known as the father of the 401(k), Mr. Johnson “was its godfather,” the trade publication Pensions & Investments wrote in a 2001 profile.
The firm’s work started with a request from the Cheltenham National Bank in Philadelphia about how it could do away with end-of-year cash bonuses while still competing for top executive talent.
Benna had what he called an “aha” moment while digging into section 401(k) of the Internal Revenue Code, which was added in 1978. That portion, covering deferred pension, profit-sharing, and stock bonus plans, had taken effect in 1980. His notion was an individual investment account, offered to all employees, that would combine a portion of their compensation with an employer contribution on a tax-deferred basis.
Mr. Johnson helped Benna pitch the idea to US Treasury Department regulators.
Benna and Mr. Johnson weren’t alone on the 401(k) frontier. Others were fleshing out similar ideas, including Herbert A. Whitehouse at Johnson & Johnson, who, in a 2003 paper, took issue with the notion that Benna or anybody else could accurately be called “the father” of the 401(k).