Federal Tax Policy Employer Matching And 401k Saving

Download or read book Federal Tax Policy, Employer Matching, and 401(K) Saving written by Christopher R. Cunningham and published by . This book was released on 2003 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.