The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Individual Retirement Accounts

  • Jonathan Skinner
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_2031

Abstract

Individual Retirement Accounts in the United States are tax-preferred saving vehicles designed to encourage saving for retirement. Many countries have adopted similar saving mechanisms such as Individual Saving Accounts in Britain, Special Saving Incentive Accounts in Ireland, and Tax-Preferred Deposit Accounts in Belgium. Enrolment rates are substantially higher among high income taxpayers, while the saving effects are often found to be quite modest. However, given the often low revenue cost of these tax preferred accounts, they may be reasonably cost-effective in terms of new saving per lost unit of revenue.

Keywords

Capital gains Individual Retirement Accounts National saving Precautionary saving Retirement Pensions 

JEL Classifications

H2 
This is a preview of subscription content, log in to check access.

Bibliography

  1. Attanasio, O., J. Banks, and M. Wakefield. 2004. Effectiveness of tax incentives to boost (retirement) saving: Theoretical motivation and empirical evidence. OECD Economic Studies 39(2): 145–172.Google Scholar
  2. Attanasio, O., and T. De Leire. 2002. IRAs and household savings revisited: Some new evidence. Economic Journal 112: 504–538.CrossRefGoogle Scholar
  3. Benjamin, D. 2005. Does 401(k) eligibility increase saving? Evidence from propensity score subclassification. Journal of Public Economics 87: 1259–1290.CrossRefGoogle Scholar
  4. Bernheim, B.D. 1997. Rethinking savings incentives. In Fiscal policy: Lessons from Economic Research, ed. A. Auerbach. Cambridge: MIT Press.Google Scholar
  5. Duflo, E., W.G. Gale, J.B. Liebman, P.R. Orszag, and E. Saez. 2006. Saving incentives for low-and middle-income families: Evidence from a field experiment with H&R block. Quarterly Journal of Economics 121: 1311–1346.CrossRefGoogle Scholar
  6. Dusseault, B., and J. Skinner. 2000. Did individual retirement accounts actually raise revenue? Tax Notes 86: 851–856.Google Scholar
  7. Engelhardt, G. 1996. Tax subsidies and household saving: Evidence from Canada. Quarterly Journal of Economics 111: 1237–1268.CrossRefGoogle Scholar
  8. Engen, E.M., and W.G. Gale. 2000. The effects of 401(k) plans on households wealth: differences across earnings groups. Working Paper No. 8032. Cambridge, MA: NBER.Google Scholar
  9. Engen, E.M., W.G. Gale, and J.K. Scholz. 1996. The illusory effects of saving incentives on saving. Journal of Economic Perspectives 10(4): 113–138.CrossRefGoogle Scholar
  10. Feenberg, D. and J. Skinner. 1989. Sources of IRA saving. In Tax policy and the economy, vol. 3, ed. L.H. Summer. Cambridge, MA: MIT Press.Google Scholar
  11. Gale, W.G., and J.K. Scholz. 1994. IRAs and household saving. American Economic Review 84: 1233–1260.Google Scholar
  12. Gokhale, J., L.J. Kotlikoff, and T. Neumann. 2001. Does participating in a 401(k) raise your lifetime taxes? Working Paper No. 8341. Cambridge, MA: NBER.Google Scholar
  13. Gravelle, J. 2000. IRAs as revenue-raisers: A critique. Tax Notes 86(9).Google Scholar
  14. Holden, S., K. Ireland, V. Leonard-Chambers, and M. Bogdan. 2005. The individual retirement account at age 30: A retrospective. Investment Company Institute Perspective 11(1): 1–23.Google Scholar
  15. Hrung, W. 2001. Information and IRAs: The influence of tax preparers. Journal of Public Economics 80: 467–484.CrossRefGoogle Scholar
  16. Hubbard, G.R., and J.S. Skinner. 1996. Assessing the effectiveness of saving incentives. Journal of Economic Perspectives 10(4): 73–90.CrossRefGoogle Scholar
  17. Joines, D.H., and J.G. Manegold. 1995. IRA and saving: Evidence from a panel of taxpayers. Mimeo: University of Southern California.Google Scholar
  18. Maffini, G. 2007. Encouraging saving through tax-preferred accounts. Tax policy studies no. 15. Paris: OECD.Google Scholar
  19. Poterba, J., S. Venti, and D. Wise. 1996. How retirement saving programs increase saving. Journal of Economic Perspectives 10(4): 91–112.CrossRefGoogle Scholar
  20. Venti, S., and D. Wise. 1986. Tax-deferred accounts, constrained choice, and estimation of individual saving. Review of Economic Studies 53: 579–601.CrossRefGoogle Scholar
  21. Venti, S., and D. Wise. 1990. Have IRAs increased US saving? Evidence from consumer expenditure surveys. Quarterly Journal of Economics 105: 661–689.CrossRefGoogle Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Jonathan Skinner
    • 1
  1. 1.