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

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This project investigates whether the catch-up provision, which allows workers over 50 to contribute more to their 401(k) plans, has been effective in increasing retirement saving. Using longitudinal Social Security Administration (SSA) data on tax-deferred earnings linked to the Survey of Income and Program Participation (SIPP), the project estimates a difference-in-differences model to determine whether workers who turned 50 after the 2002 adoption of the catch-up provision increased their 401(k) contributions by a greater amount or proportion than those who had previously turned 50, and whether this change differs between those at or below the tax-deductible maximum. The findings of the project will aid policymakers in designing cost-effective interventions aimed at increasing retirement saving.