Congress has begun exploring ideas for reinventing the 401(k) retirement savings plan – partly to address a huge retirement savings gap facing many Americans, but also to shore up the public coffers.

Last week, the Senate Finance Committee began conducting hearings to consider options for making these type of defined contribution savings plans more efficient and encourage more people to use them. The committee is also expected to make recommendations for potential deficit-reduction strategies, such as changing the tax break from a deduction to a credit.

Named for the subsection of the Internal Revenue Code that authorized them, 401(k) accounts have provided a vehicle for plan participants to defer taxes on their savings until retirement since the early 1980s. Under a 401(k) plan, employees can elect to make pre-tax, tax-deferred contributions to their accounts; matching contributions made by the employer are tax-deductible.

Less than half of the working public currently has access to workplace-based retirement plans, according to a statement last week from the finance committee.

Moreover, the average account balance is woefully inadequate to generate enough income for someone to comfortably live off during retirement, experts say. The average 401(k) balance is now approximately $71,500, according to Fidelity Investments, up from an average balance of about $50,000 at the height of the financial crisis three years ago.

Among the proposals the finance committee heard last week was a plan from the Brookings Institution that would eliminate the current 401(k) tax deduction, substituting a refundable tax credit that would be deposited directly to the participant’s 401(k) account. The move would provide more incentive for additional households to participate and offset pressure created by the weak economy for people to reduce their contributions, said William Gale, a Brookings senior fellow.

Under that proposal, each individual would receive a flat 30 percent credit on the amount contributed, rather than the current tax benefit that varies from 15 to 35 percent depending upon the person’s tax bracket.

“The 401(k) plan has been extremely successful,” said Luke Vandermillen, vice president of retirement and investor services for Principal. “Changing the tax incentive would be a step in the wrong direction.”

Vandermillen said the emphasis needs to be on encouraging more companies to provide 401(k) plans, and on communicating the need for better retirement savings to employees.

“Most people still underestimate the amount of money needed to retire successfully,” he said. “You need enough assets to generate (income of) 75 to 80 percent of what you were making when you were working.”