Federal tax policy, employer matching, and 401(k) saving: Evidence from HRS W-2 records

Christopher R. Cunningham, Gary V. Engelhardt

Research output: Contribution to journalArticle

23 Scopus citations

Abstract

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.

Original languageEnglish (US)
Pages (from-to)617-645
Number of pages29
JournalNational Tax Journal
Volume55
Issue number3
DOIs
StatePublished - Sep 2002

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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