The tax benefit of income smoothing

Kristian Rydqvist, Steven T. Schwartz and Joshua D. Spizman

Journal of Banking & Finance, 2014, vol. 38, issue C, 78-88

Abstract: A worker can reduce tax liability by contributing to a private pension plan when marginal tax rates are high and withdraw pension benefits when marginal tax rates are low. We quantify the tax benefit of income smoothing through the private retirement system and find that it is negligible. This conclusion is important to households, investment advisers, tax policymakers, and scholars engaged in financial retirement planning.

Keywords: Private pensions; Life-cycle model; Tax progressivity (search for similar items in EconPapers)
JEL-codes: D91 G11 G18 G23 H24 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:38:y:2014:i:c:p:78-88

DOI: 10.1016/j.jbankfin.2013.09.017

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