Participation in and Contributions to 401(K) Pension Plans: Evidence Om Plan Data

34 Pages Posted: 22 Jun 2004 Last revised: 24 Jun 2010

See all articles by Leslie E. Papke

Leslie E. Papke

Michigan State University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: October 1992


401(k) plans differ from traditional employer-sponsored pension plans in that employees are permitted to make pre-tax contributions and the employer may match pan of the contribution. Since participation in these plans is voluntary, the sensitivity of participation and contributions to plan characteristics - notably the employer matching rate -- will play a critical role in retirement saving. Using plan level data from Form 5500s filed annually with the Internal Revenue Service, I find that there is potential for expanding retirement saving through 401(k) plans although there is evidence that the Tax Reform Act of 1986 reduced their attractiveness. Annual employee contributions were reduced by about 4 percent compared to the prior year after controlling for employer match rates. A simple model of employee contributions predicts that participation should increase with the match rate, and that, under reasonable assumptions, contributions will increase as well, but can eventually fall at higher match rates. I find evidence of both these effects. A .05 increase in the matching rate is associated with one to five percent increase in employee contributions.

Suggested Citation

Papke, Leslie E., Participation in and Contributions to 401(K) Pension Plans: Evidence Om Plan Data (October 1992). NBER Working Paper No. w4199. Available at SSRN:

Leslie E. Papke (Contact Author)

Michigan State University - Department of Economics ( email )

East Lansing, MI 48824
United States
517-355-3773 (Phone)
517-432-1068 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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