Federal Tax Policy, Employer Matching, and 401(K) Saving: Evidence From HRS W-2 Records
We use panel data from W-2 records for households in the Health and Retirement Study (HRS) to examine the responsiveness of 401(k) saving to taxation, employer matching, and lifecycle factors. The limit on the tax deductibility of IRA contributions enacted in the Tax Reform Act of 1986 appears to have raised 401(k) saving by 6 percent. Individuals eligible for employer matching contribute substantially more, but this result is not robust once job and firm characteristics are taken into account. Alternative pension coverage greatly reduces 401(k) saving, whereas the ability to direct the investment of funds is associated with higher saving.
Volume (Year): 55 (2002)
Issue (Month): 3 (September)
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- James J. Choi & David Laibson & Brigitte C. Madrian & Andrew Metrick, 2004.
"For Better or for Worse: Default Effects and 401(k) Savings Behavior,"
in: Perspectives on the Economics of Aging, pages 81-126
National Bureau of Economic Research, Inc.
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