[From Preface] This Congressional Budget Office background paper updates CBO’s Utilization of Tax Incentives for Retirement Saving (August 2003). That paper examined participation rates and contributions to employment-based retirement plans, individual retirement accounts (IRAs), and Keogh plans in 1997. This paper presents comparable figures for 2000 and shows how patterns of utilization changed between the two years. The paper also presents data that were not available in 1997. Roth IRAs, for example, became available in 1998. In addition, information on contributions to simplified employee pensions (SEPs) and savings incentive match plans for employees (SIMPLEs) became available in 2000.
Overall, the paper finds that participation in tax-favored retirement plans declined slightly over the study period. Increases in IRA and 401(k) participation were more than offset by declines in participation in noncontributory plans, such as traditional defined-benefit plans. In keeping with CBO’s mandate to provide objective, impartial analysis, the report makes no recommendations.