Georgetown University Law Center
Scholarship @ GEORGETOWN LAW
2010
A Timeline of the Evolution of Retirement in the
United States
Workplace Flexibility 2010, Georgetown University Law Center
This paper can be downloaded free of charge from:
http://scholarship.law.georgetown.edu/legal/50
This open-access article is brought to you by the Georgetown Law Library. Posted with permission of the author.
Follow this and additional works at: http://scholarship.law.georgetown.edu/legal
Part of the Labor and Employment Law Commons, Labor Relations Commons, and the Public Policy Commons
, Workplace Flexibility 2010
Phased Retirement
A TIMELINE OF THE EVOLUTION
OF
RETIREMENT IN THE UNITED STATES
This document provides key highlights in the history of retirement in the United
States. It provides some background on how the concept of retirement, and its
legal treatment, has evolved. This timeline does not include every law related to
pension and retirement plans. Rather, it emphasizes those laws that have come
to shape how we view retirement, particularly the tax laws that encouraged
employers to establish pension and retirement plans in the first place.
1875 – The American Express Company establishes the first private pension
plan in the United States in an effort to create a stable, career oriented
workforce.i
Late 19th Century – Roughly 75 percent of all males over age 65 are working. If
a male over age 65 is not working, it is likely because he is disabled.ii
1899 – There are 13 private pension plans in the country.iii
1900 – Life expectancy is approximately 49 years at birth. Individuals who reach
the age of 60 can expect to live, on average, an additional 12 years.iv In general,
workers continue to work as long as they are able.v
1913 – Congress enacts the first federal income tax law.
1914 – Although there is no explicit provision about pensions in the 1913 income
tax law, the IRS rules that pensions paid to retired employees are deductible,
similar to wages, as ordinary and necessary business expenses.vi
1919 – Over 300 private pension plans exist, covering approximately 15 percent
of the nation’s wage and salary employees.vii The growth of pension coverage is
attributed to employers’ desire to attract workers, reduce labor turnover, and
“more [humanely] remove older, less productive employees.”viii
1921 – The Revenue Act of 1921 exempts trust income coming from stock bonus
or profit sharing plans from an employee’s current taxable income. It also
provides that trust income is taxed at the time that it is distributed to an
employee, to the extent that this income has exceeded the employee’s own
contributions. The Revenue Act of 1921 also established that a profit-sharing or
stock bonus plan must be established for the exclusive benefit of “some or all”
employees.
1926 – The Revenue Act of 1926 exempts trust income coming from pension
plans from an employee’s current taxable income. This act also established that
pension plans must be established for the exclusive benefit of “some or all
employees.
Scholarship @ GEORGETOWN LAW
2010
A Timeline of the Evolution of Retirement in the
United States
Workplace Flexibility 2010, Georgetown University Law Center
This paper can be downloaded free of charge from:
http://scholarship.law.georgetown.edu/legal/50
This open-access article is brought to you by the Georgetown Law Library. Posted with permission of the author.
Follow this and additional works at: http://scholarship.law.georgetown.edu/legal
Part of the Labor and Employment Law Commons, Labor Relations Commons, and the Public Policy Commons
, Workplace Flexibility 2010
Phased Retirement
A TIMELINE OF THE EVOLUTION
OF
RETIREMENT IN THE UNITED STATES
This document provides key highlights in the history of retirement in the United
States. It provides some background on how the concept of retirement, and its
legal treatment, has evolved. This timeline does not include every law related to
pension and retirement plans. Rather, it emphasizes those laws that have come
to shape how we view retirement, particularly the tax laws that encouraged
employers to establish pension and retirement plans in the first place.
1875 – The American Express Company establishes the first private pension
plan in the United States in an effort to create a stable, career oriented
workforce.i
Late 19th Century – Roughly 75 percent of all males over age 65 are working. If
a male over age 65 is not working, it is likely because he is disabled.ii
1899 – There are 13 private pension plans in the country.iii
1900 – Life expectancy is approximately 49 years at birth. Individuals who reach
the age of 60 can expect to live, on average, an additional 12 years.iv In general,
workers continue to work as long as they are able.v
1913 – Congress enacts the first federal income tax law.
1914 – Although there is no explicit provision about pensions in the 1913 income
tax law, the IRS rules that pensions paid to retired employees are deductible,
similar to wages, as ordinary and necessary business expenses.vi
1919 – Over 300 private pension plans exist, covering approximately 15 percent
of the nation’s wage and salary employees.vii The growth of pension coverage is
attributed to employers’ desire to attract workers, reduce labor turnover, and
“more [humanely] remove older, less productive employees.”viii
1921 – The Revenue Act of 1921 exempts trust income coming from stock bonus
or profit sharing plans from an employee’s current taxable income. It also
provides that trust income is taxed at the time that it is distributed to an
employee, to the extent that this income has exceeded the employee’s own
contributions. The Revenue Act of 1921 also established that a profit-sharing or
stock bonus plan must be established for the exclusive benefit of “some or all”
employees.
1926 – The Revenue Act of 1926 exempts trust income coming from pension
plans from an employee’s current taxable income. This act also established that
pension plans must be established for the exclusive benefit of “some or all
employees.
