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Variation in marginal tax rates around retirement and the return to saving in tax-favored accounts

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dc.contributor.advisor James Poterba. en_US
dc.contributor.author Bishop, Tonja Bowen en_US
dc.contributor.other Massachusetts Institute of Technology. Dept. of Economics. en_US
dc.date.accessioned 2008-12-11T18:29:29Z
dc.date.available 2008-12-11T18:29:29Z
dc.date.copyright 2008 en_US
dc.date.issued 2008 en_US
dc.identifier.uri http://hdl.handle.net/1721.1/43799
dc.description Thesis (S.M.)--Massachusetts Institute of Technology, Dept. of Economics, 2008. en_US
dc.description Includes bibliographical references (p. 30-31). en_US
dc.description.abstract Economists have generally assumed that to the extent possible, retirement savings should be done in a tax-deferred account. However, the advent of Roth-style tax-favored accounts and concerns about the tax implications of increasing retirement income through tax-deferred distributions indicate that this question merits a reevaluation. I use data on married couples in the HRS and NBER's TAXSIM model to measure the probability of a household facing a higher tax rate at ages 62, 65, and 69 than the household faced at age 57. When the marginal tax rate is higher, the household could decrease their lifetime tax by choosing a Roth-style account over a tax-deferred account. I also measure the probability of facing a marginal tax rate that is sufficiently high that the household minimizes tax payments by using a taxable account rather than a tax-deferred account, in the absence of a Roth option. I find that for distributions beginning at age 69, between 10 and 35% of households with taxable income at age 57 should prefer a Roth account to a tax-deferred account, but very few households prefer a taxable account. en_US
dc.description.statementofresponsibility by Tonja Bowen Bishop. en_US
dc.format.extent 50 p. en_US
dc.language.iso eng en_US
dc.publisher Massachusetts Institute of Technology en_US
dc.rights M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission. en_US
dc.rights.uri http://dspace.mit.edu/handle/1721.1/7582 en_US
dc.subject Economics. en_US
dc.title Variation in marginal tax rates around retirement and the return to saving in tax-favored accounts en_US
dc.type Thesis en_US
dc.description.degree S.M. en_US
dc.contributor.department Massachusetts Institute of Technology. Dept. of Economics. en_US
dc.identifier.oclc 261480641 en_US


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