Estimates of Tax-deferred Retirement Savings Behavior***

private retirement savings programs reThis study examines the tax-favored results in the largest single category of tax tirement savings behavior of non-self-emexpenditures in the budget, both before ployed households. Our estimates suggest and after TRA 86. Previously, the U.S. that perceptions of the household's marTreasury (1986) had estimated 59.2 bilginal tax rate are of limited importance in lion dollars and 15.9 billion dollars of revthe decision to invest in tax-deferred savenue loss for the 1987 fiscal year from the ings instruments. However, the housetax treatment of employer-provided rehold's income is estimated to significantly tirement plans and individual retirement affect the decision. We also consider the efaccounts, respectively. After considering fect that the Tax Reform Act of 1986 may the impact of tax reform, these estimates -favored redollars and 13.9 billion dollars, respeehave on the purchase of tax were revised downward to 45.7 billion tirement savings instruments. tively (U.S. Treasury, 1987). In addition, the revenue loss for fiscal year 1988 was