Federal Tax Policy, Employer Matching, and 401(k) Saving: Evidence from HRS W-2 Records

TitleFederal Tax Policy, Employer Matching, and 401(k) Saving: Evidence from HRS W-2 Records
Publication TypeJournal Article
Year of Publication2002
AuthorsCunningham, CR, Engelhardt, GV
JournalNational Tax Journal
VolumeLV
Issue3
Pagination617-645
Call Numberpubs_2002_Cunningham_CNaTaxJourn.pdf
KeywordsEmployment and Labor Force, Event History/Life Cycle, Pensions, Public Policy
Abstract

This paper uses 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 . 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.

Notes

RDA 1996-007

Endnote Keywords

Life Cycle Models/Tax Policy/401(k) participation and balances/Deferred compensation/Fiscal policy/Fiscal policy/Tax deductions/Employer contributions

Endnote ID

9922

Citation Key6815