Do required minimum distribution 401(k) rules matter, and for whom? Insights from a lifecycle model

Vanya Horneff, Raimond Maurer and Olivia Mitchell

Journal of Banking & Finance, 2023, vol. 154, issue C

Abstract: Tax-qualified vehicles have helped U.S. private-sector workers accumulate $33Tr in retirement plans. An often-overlooked important institutional feature shaping decumulations from these plans is the “Required Minimum Distribution” (RMD) regulation requiring retirees to withdraw a minimum fraction from their retirement accounts or pay excise taxes on withdrawal shortfalls. Our calibrated lifecycle model measures the impact of RMD rules on heterogeneous households’ financial behavior during their work lives and in retirement. The model shows that reforms delaying or eliminating the RMD rules have little effect on consumption profiles, but they would influence withdrawals and tax payments for households with bequest motives.

Keywords: Life cycle saving; Household finance; 401(k) plan; Retirement; Tax policy (search for similar items in EconPapers)
JEL-codes: D14 G11 G50 G51 H24 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Do Required Minimum Distribution 401(k) Rules Matter, and For Whom? Insights from a Lifecycle Model (2021)
Working Paper: Do Required Minimum Distribution 401(k) Rules Matter, and for Whom? Insights from a Lifecylce Model (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:154:y:2023:i:c:s0378426623001462

DOI: 10.1016/j.jbankfin.2023.106941

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