Trends in 401(k) and IRA Contribution Activity, 1999-2002--Results from a Panel of Matched Tax Returns and Information Documents

of Income (SOI) Division has made it possible to study trends in contributions by individual taxpayers over time to Individual Retirement Arrangements (IRA’s), as well as the participation in other types of retirement plans. Using a simple random panel of over 71,000 individual taxpayers who filed for Tax Years 1999 through 2002, this paper will analyze persistency in taxpayers ’ contri-bution activities in traditional IRA’s and in 401(k) plans. Several possible factors affecting persistency will be considered, including age, marital status, gender, and income. All of the analysis in this paper is limited to those taxpayers who filed for all 4 years in the study--1999– 2002. In the case of joint returns, primary and secondary taxpayers were considered separately. Weighted, the file represents 143.2 million taxpayers, about 81 percent of the original 177.0 million who filed for 1999. Changes in marital status or marriage partners did not affect inclusion in the study--as long as an individual was represented as a taxpayer on a return for all 4 years, he or she could be included in the panel. Taxpayers ’ Use of Traditional IRA’s At yearend 2002, nearly 50 million taxpayers held a total of $2.5 trillion in IRA assets. The bulk of these were traditional IRA’s: 40 million taxpayers with $2.3 trillion in assets. Traditional IRA’s may be contributory and/or the result of rollovers from qualified employer-sponsored retirement plans. This paper focuses on con-tribution activity among taxpayers in the 1999–2002 panel dataset