2026-09-21T03:53:10Zhttps://dspace.mit.edu/server/oai/requestoai:dspace.mit.edu:1721.1/437992022-01-13T07:54:28Zcom_1721.1_7582com_1721.1_7581col_1721.1_131023
James Poterba.
Bishop, Tonja Bowen
Massachusetts Institute of Technology. Dept. of Economics.
Massachusetts Institute of Technology. Department of Economics
2008-12-11T18:29:29Z
2008-12-11T18:29:29Z
2008
2008
http://hdl.handle.net/1721.1/43799
261480641
Thesis (S.M.)--Massachusetts Institute of Technology, Dept. of Economics, 2008.
Includes bibliographical references (p. 30-31).
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.
by Tonja Bowen Bishop.
S.M.
50 p.
eng
Massachusetts Institute of Technology
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.
http://dspace.mit.edu/handle/1721.1/7582
Economics.
Variation in marginal tax rates around retirement and the return to saving in tax-favored accounts
Thesis
application/pdf
Publication
unknown
unknown
<Publication xmlns="https://www.openaire.eu/cerif-profile/1.1/" id="528ad195-09f4-4e63-b1da-a3a4c64f64b3">
<Type xmlns="https://www.openaire.eu/cerif-profile/vocab/COAR_Publication_Types">http://purl.org/coar/resource_type/c_1843</Type>
<Language>eng</Language>
<Title>Variation in marginal tax rates around retirement and the return to saving in tax-favored accounts</Title>
<PublishedIn>
<Publication>
</Publication>
</PublishedIn>
<PublicationDate>2008</PublicationDate>
<Authors>
<Author>
<DisplayName>Bishop, Tonja Bowen</DisplayName>
<Affiliation>
<OrgUnit>
</OrgUnit>
</Affiliation>
</Author>
</Authors>
<Editors>
</Editors>
<Publishers>
<Publisher>
<DisplayName>Massachusetts Institute of Technology</DisplayName>
<OrgUnit />
</Publisher>
</Publishers>
<License>http://dspace.mit.edu/handle/1721.1/7582</License>
<Keyword>Economics.</Keyword>
<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.</Abstract>
<Access xmlns="http://purl.org/coar/access_right"
>
</Access>
</Publication>