The impact of withdrawal penalties on retirement savings

• 成果类型: Article
• 署名作者: Stuart, Ellen; Bryant, Victoria L.
• 署名单位: University of Sydney
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2024.105083
• 发表日期: 2024
• 关键词: Retirement savings; retirement income; Tax penalties

摘要

Tax-benefited retirement accounts have features designed to encourage saving, including a penalty for withdrawing before age 5921. Account holders also face a penalty for failing to take required minimum withdrawals after age 72. Using a bunching analysis, we estimate that these penalties cause over 17% of traditional IRA holders to change their withdrawal timing each year, shifting almost $60 billion of distributions annually. We estimate a dynamic life-cycle model to analyze the effect of changing these penalties. For both penalties, we find alternative combinations of age threshold and penalty rate that lead to increased average welfare and lifetime tax remittances.