Though 401(k) plans (a defined contribution retirement plan) are supposed to build wealth, a new study by the Economic Policy Institute suggests that these plans are actually exacerbating wealth inequality by not adequately providing for most people’s retirement.

The report authors explain that the 401(k) began as a creative supplement to pension plans. But, it was never intended to be the primary base for retirement. Now, the report suggests, the plans serve primarily as a tax shelter for the wealthy. For instance, among America’s top 20 percent income bracket, nearly 90 percent have savings in retirement accounts that average $308,674.

The paradox is people often think of 401(k) plans as a middle class perk, when, in reality, nearly half of U.S. households don’t have savings invested in any retirement plan. Half of the middle 20% of income earners with savings in retirement accounts have an average of only $34,981 in them. And even fewer — 11 percent — of the bottom 20% of income earners have retirement savings, averaging only $7,543.

Part of the problem stems from many low-wage or part-time jobs not offering a retirement plan. Unlike defined benefit pensions, which automatically enroll workers, 401(k) plans […]