Research Report Tax Law Changes Allow Employees to Contribute More to Tax-Deferred Accounts
Karen E. Smith, Eric Toder
Display Date
Download Report
(501.86 KB)

Since 2001, the dollar limit on employee contributions to employer-sponsored tax-deferred retirement accounts has increased from 32 percent of average earnings ($10,500) in 2001 to 39 percent of earnings in 2006 ($15,000). Employees over age 50 may make additional "catch-up" contributions, which will raise the total dollar limit for them to 52 percent of average earnings in 2006. But very few employees contribute the maximum allowable amount. Of those participating in plans, only 6 percent contributed the maximum amount in 2003. Additional increases in the contribution limit are likely to reduce the share of those who contribute the maximum.
Research Areas Wealth and financial well-being Aging and retirement Taxes and budgets
Tags Pensions Wages and nonwage compensation Individual taxes Federal budget and economy Campaigns, proposals, and reforms Retirement policy Federal tax issues and reform proposals
Policy Centers Income and Benefits Policy Center