PARTICIPATION IN AND CONTRIBUTIONS TO 401(K) PENSION PLANS - EVIDENCE FROM PLAN DATA

401(k) plans differ from traditional employer-sponsored pension plans in that employees are permitted to make voluntary pre-tax contributions. Hence, the sensitivity of participation and contributions to plan characteristics--notably the employer matching rate--may play a critical role in retirement saving. Using plan level data from Form 5500s filed annually with the Internal Revenue Service, I find that substantial increases occur when an employer moves from a zero to a small or moderately sized match; but that at higher match rates employee contributions fall.