Do Required Minimum Distribution 401(k) Rules Matter, and For Whom? Insights from a Lifecycle Model

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dc.contributor.authorHorneff, Vanya
dc.contributor.authorMitchell, Olivia S
dc.contributor.authorMitchell, Olivia S
dc.date2023-05-18T00:23:45.000
dc.date.accessioned2023-05-23T00:33:19Z
dc.date.available2023-05-23T00:33:19Z
dc.date.issued2021-02-14
dc.date.submitted2021-02-19T13:40:40-08:00
dc.description.abstractTax-qualified vehicles helped U.S. private-sector workers accumulate $25Tr in retirement assets. An often-overlooked important institutional feature shaping decumulations from these retirement plans is the “Required Minimum Distribution” (RMD) regulation, requiring retirees to withdraw a minimum fraction from their retirement accounts or pay excise taxes on withdrawal shortfalls. Our calibrated lifecycle model measures the impact of RMD rules on financial behavior of heterogeneous households during their worklives and retirement. We show that proposed reforms to delay or eliminate the RMD rules should have little effects on consumption profiles but more impact on withdrawals and tax payments for households with bequest motives.
dc.description.statementofresponsibility<p>The authors are grateful for research support from the TIAA Institute, the Institute for Financial Research (SAFE) at the Goethe University Frankfurt, the German Investment and Asset Management Association (BVI), and the Pension Research Council/Boettner Center at The Wharton School of the University of Pennsylvania. We also thank the initiative High Performance Computing in Hessen for granting us computing time at the LOEWE-CSC and Lichtenberg Cluster. We thank Mark Iwry for invaluable comments, as well as Richard Shea, Christopher Lowther, Jack Lund, and Brent Davis.</p>
dc.identifier.urihttps://repository.upenn.edu/handle/20.500.14332/44095
dc.legacy.articleid1700
dc.legacy.fulltexturlhttps://repository.upenn.edu/cgi/viewcontent.cgi?article=1700&amp;context=prc_papers&amp;unstamped=1
dc.rights<p>Opinions and any errors are solely those of the authors and not those of any individual cited or any institutions with which the authors are affiliated. ©2021 Horneff, Maurer, and Mitchell.</p>
dc.source.issue698
dc.source.issueWP2021-02
dc.source.journalWharton Pension Research Council Working Papers
dc.source.statuspublished
dc.subject.classificationD14, G11, G50, G51, H24
dc.subject.otherlife cycle saving
dc.subject.otherhousehold finance
dc.subject.other401(k) plan
dc.subject.otherretirement
dc.subject.othertax policy
dc.subject.otherEconomics
dc.titleDo Required Minimum Distribution 401(k) Rules Matter, and For Whom? Insights from a Lifecycle Model
dc.typeWorking Paper
digcom.contributor.authorHorneff, Vanya
digcom.contributor.authorMaurer, Raimond
digcom.contributor.authorisAuthorOfPublication|email:mitchelo@wharton.upenn.edu|institution:The Wharton School, Univ. of PA|Mitchell, Olivia S
digcom.identifierprc_papers/698
digcom.identifier.contextkey21734589
digcom.identifier.submissionpathprc_papers/698
digcom.typeworkingpaper
dspace.entity.typePublication
relation.isAuthorOfPublication35f0f29e-9f02-491f-b958-1434c5d08b00
relation.isAuthorOfPublication35f0f29e-9f02-491f-b958-1434c5d08b00
relation.isAuthorOfPublication.latestForDiscovery35f0f29e-9f02-491f-b958-1434c5d08b00
upenn.schoolDepartmentCenterWharton Pension Research Council Working Papers
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