Do Catch-Up Contributions Increase 401(k) Saving?

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The brief’s key findings are:

  • To encourage Americans to save more for retirement, some suggest raising 401(k) contribution limits.
  • To assess such an option, this analysis estimates the effects of a 2001 increase in 401(k) limits that also introduced a higher “catch-up” limit for those 50 and over.
  • The increase in the limits did boost contributions in 2002-05, but mostly for those near the prior limits, particularly those eligible to make catch-up contributions.
  • Since few participants – only about 10 percent – are constrained by the limits, raising them does not offer a broad-based solution for low saving rates.