PARTICIPATION IN AND CONTRIBUTIONS TO 401(K) PENSION PLANS - EVIDENCEFROM PLAN DATA

401(k) plans differ from traditional employer-sponsored pension plans in that employees are permitted to make voluntary pre-tax contribution s. Hence, the sensitivity of participation and contributions to plan c haracteristics--notably the employer matching rate--may play a critica l role in retirement saving. Using plan level data from Form 5500s fil ed annually with the Internal Revenue Service, I find that substantial increases occur when an employer moves from a zero to a small or mode rately sized match; but that at higher match rates employee contributi ons fall.