Do Required Minimum Distribution 401(k) Rules Matter, and For Whom? Insights from a Lifecycle Model

Vanya Horneff, Raimond Maurer and Olivia Mitchell

No 28490, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Tax-qualified vehicles helped U.S. private-sector workers accumulate $25Tr in retirement assets. An often-overlooked important institutional feature shaping decumulations from these retirement 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 financial behavior of heterogeneous households during their worklives and retirement. We show that proposed reforms to delay or eliminate the RMD rules should have little effects on consumption profiles but more impact on withdrawals and tax payments for households with bequest motives.

JEL-codes: D14 G11 G5 G51 H24 (search for similar items in EconPapers)
Date: 2021-02
New Economics Papers: this item is included in nep-age
Note: AG
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Published as Vanya Horneff & Raimond Maurer & Olivia S. Mitchell, 2023. "Do Required Minimum Distribution 401(k) Rules Matter, and For Whom? Insights from a Lifecycle Model," Journal of Banking & Finance, .

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Journal Article: Do required minimum distribution 401(k) rules matter, and for whom? Insights from a lifecycle model (2023)
Working Paper: Do Required Minimum Distribution 401(k) Rules Matter, and for Whom? Insights from a Lifecylce Model (2021)
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