Early Withdrawals from Retirement Accounts during the Great Recession

30 Pages Posted: 11 May 2013

See all articles by Robert Argento

Robert Argento

Board of Governors of the Federal Reserve System

Victoria L. Bryant

Government of the United States of America - Internal Revenue Service (IRS)

John Sabelhaus

Brookings Institution

Multiple version iconThere are 2 versions of this paper

Date Written: March 1, 2013

Abstract

Early withdrawals from retirement accounts are a double-edged sword, because withdrawals reduce retirement resources, but they also allow individuals to smooth consumption when they experience demographic and economic shocks. Using tax data, we show that pre-retirement withdrawals increased between 2004 and 2010, especially after 2007, but early withdrawal rates are substantial (relative to new contributions) in all of those years. Early withdrawal events are strongly correlated with shocks to income and marital status, and lower-income taxpayers are more likely to experience the types of shocks associated with early withdrawals and more likely to have a taxable withdrawal when they experience a given shock.

Keywords: Retirement plans, withdrawals

JEL Classification: G23, H24, H31

Suggested Citation

Argento, Robert and Bryant, Victoria L. and Sabelhaus, John, Early Withdrawals from Retirement Accounts during the Great Recession (March 1, 2013). FEDS Working Paper No. 2013-22, Available at SSRN: https://ssrn.com/abstract=2262718 or http://dx.doi.org/10.2139/ssrn.2262718

Robert Argento

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Victoria L. Bryant

Government of the United States of America - Internal Revenue Service (IRS) ( email )

1111 Constitution Avenue, NW
Washington, DC 20224
United States

John Sabelhaus (Contact Author)

Brookings Institution ( email )

1775 Massachusetts Ave, NW
Washington, DC 20036
United States

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