Dimensions of 401(K) Plan Design

29 Pages Posted: 30 Jun 2006

See all articles by Olivia S. Mitchell

Olivia S. Mitchell

University of Pennsylvania - The Wharton School; National Bureau of Economic Research (NBER)

Stephen P. Utkus

Vanguard Center for Investor Research

Tongxuan Yang

University of Pennsylvania - Insurance & Risk Management Department

Date Written: 2005

Abstract

This paper explores why plan sponsors design their 401(k) plans the way they do. Employing a unique, rich dataset of over five hundred 401(k) plans, we find that these plans are principally a form of tax-motivated compensation under the restriction of federal non-discrimination rules. In other words, to appeal to better-paid workers, employers offer more generous monetary and nonmonetary plan design features. At the same time, complex federal tax rules restrict pay discrimination in favor of the highly-paid employees.

Suggested Citation

Mitchell, Olivia S. and Utkus, Stephen P. and Yang, Tongxuan, Dimensions of 401(K) Plan Design (2005). Pension Research Council WP2005-05. Available at SSRN: https://ssrn.com/abstract=912274 or http://dx.doi.org/10.2139/ssrn.912274

Olivia S. Mitchell (Contact Author)

University of Pennsylvania - The Wharton School ( email )

Philadelphia, PA 19104-6365
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Stephen P. Utkus

Vanguard Center for Investor Research ( email )

100 Vanguard Boulevard, M38
Malvern, PA 19355
United States
610-669-6308 (Phone)

Tongxuan Yang

University of Pennsylvania - Insurance & Risk Management Department ( email )

The Wharton School
Philadelphia, PA 19104-6365
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
146
rank
196,198
Abstract Views
1,308
PlumX Metrics