Do ‘Catch-up Limits’ Raise Retirement Saving? Evidence from a Regression Discontinuity Design
Adam Lavecchia ()
No 1712E, Working Papers from University of Ottawa, Department of Economics
This paper studies the effect of raising contribution limits on retirement saving by exploiting the ‘catch-up limit’ provision, a rule which allows those over the age of 50 to make higher IRA and 401(k) contributions than those under 50. Using an age-related regression discontinuity design, I find that eligibility for ‘catch-up limits’ leads to a large increase in total tax-deferred contributions for those without access to a 401(k) plan. This is driven by a 25 percent increase in average IRA contributions and a 21 percent increase in the likelihood of making an IRA contribution. I also find no significant effects on overall 401(k) contributions. The findings suggest that, contrary to the neoclassical life-cycle model, the response to eligibility for ‘catchup limits’ was not limited to constrained savers.
Keywords: Retirement saving; Tax-preferred savings accounts; Contribution limits; Regression discontinuity design (search for similar items in EconPapers)
JEL-codes: D14 H31 J26 (search for similar items in EconPapers)
Pages: 77 pages
New Economics Papers: this item is included in nep-age and nep-pbe
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Journal Article: Do "Catch-Up Limits" Raise Retirement Saving? Evidence from a Regression Discontinuity Design (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:ott:wpaper:1712e
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