DO 401(K) CONTRIBUTIONS CROWD OUT OTHER PERSONAL SAVING

During the late 1980s, contributions to 401(k) plans eclipsed contribu tions to Individual Retirement Accounts (IRAs) as the leading form of tax-deferred individual retirement saving in the United States. In thi s paper we describe patterns of participation in 401(k) plans, contras t these patterns with IRA participation, and evaluate the net impact o f 401(k) contributions on personal saving. We find that 401(k) partici pation conditional on eligibility exceeds 60% at all income levels. In contrast, IRA participation at the height of that program rose sharpl y with income. We use two methods to evaluate the net saving effect of 401(k) contributions on personal saving: we compare the financial ass ets of families who are eligible for 401(k) saving with the assets of those who are not eligible, and we consider the change over time in th e assets of like groups of savers. We find little evidence that 401(k) contributions substitute for other forms of personal saving, includin g IRA contributions.