What's the tax advantage of 401(k)s?

Munnell, Alicia Haydock, Laura Quinby, and Anthony Webb. “What's the tax advantage of 401(k)s?”. Issue in Brief 12-4, Chestnut Hill, Mass.: Center for Retirement Research at Boston College, February 2012. http://hdl.handle.net/2345/bc-ir:103942.
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Abstract

The brief's key findings are: (1) The tax deferral for 401(k) plans costs the Treasury about $50-70 billion per year. (2) Calculating the cost requires comparing how much individuals would pay in taxes on savings within a 401(k) to how much they would pay outside a 401(k). (3) Recent deficit reduction proposals would lower 401(k) contribution caps, which would reduce the tax advantage of 401(k)s for high earners. (4) however, these proposals would also eliminate preferential tax rates for dividends and capital gains, which would increase the attractiveness of 401(k)s.

Title
What's the tax advantage of 401(k)s?
Author
Munnell, Alicia Haydock
Quinby, Laura
Webb, Anthony
School
Carroll School of Management
Discipline
Finance
Center
Center for Retirement Research
Genre
report
Date Issued
February 2012
Publisher
Center for Retirement Research at Boston College
Series Title
Issue in Brief
Series Number
12-4
Version Identification
Version of record.
Persistent Link
http://hdl.handle.net/2345/bc-ir:103942
Use Restrictions
These materials are made available for use in research, teaching and private study, pursuant to U.S. Copyright Law. The user must assume full responsibility for any use of the materials, including but not limited to, infringement of copyright and publication rights of reproduced materials. Any materials used for academic research or otherwise should be fully credited with the source. The publisher or original authors may retain copyright to the materials.
Subject
Financing retirement

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