Who takes advantage of tax-deferred saving programs? Evidence from federalincome tax data

This paper provides insight into the attributes of wage-earning households that participate in tax-deferred retirement savings plans. Examining data f rom federal tax returns, we find that approximately 52 percent of individua ls and 55 percent of households participated in a retirement savings progra m in 1996. Excluding households with wages within the 1996 poverty threshol ds and individuals under age 21 or over age 70, the age-wage restricted par ticipation rates were 66 percent and 79 percent for individuals and househo lds, respectively. Estimating probit equations, we find that households wit h a single-earner or having dependents are less likely to participate in a plan. Higher wage-earnings, non-labor income, and marginal tax rates tend t o increase the probability of participation.