TY - JOUR AU - Brown, Jeffrey R AU - Poterba, James AU - Richardson, David TI - Do Required Minimum Distributions Matter? The Effect of the 2009 Holiday On Retirement Plan Distributions JF - National Bureau of Economic Research Working Paper Series VL - No. 20464 PY - 2014 Y2 - September 2014 DO - 10.3386/w20464 UR - http://www.nber.org/papers/w20464 L1 - http://www.nber.org/papers/w20464.pdf N1 - Author contact info: Jeffrey R. Brown Gies College of Business University of Illinois at Urbana-Champaign 1206 S. Sixth Street Champaign, IL 61820 Tel: 217/333-3322 E-Mail: brownjr@illinois.edu James M. Poterba Department of Economics, E52-444 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/253-6673 Fax: 617/258-7804 E-Mail: poterba@nber.org David P. Richardson TIAA-CREF Institute 8500 Andrew Carnegie Blvd. Charlotte, NC 28262 E-Mail: dprichardson@tiaa.org M1 - published as Jeffrey Brown, James Poterba, David P. Richardson. "Do Required Minimum Distribution Rules Matter? The Effect of the 2009 Holiday on Retirement Plan Distributions," in Roger Gordon and Christian Keuschnigg, organizers, "Personal Income Taxation and Household Behavior (TAPES)" Elsevier, Journal of Public Economics, Volume 151 (2016) M2 - featured in NBER digest on 2015-01-30 M3 - presented at "Trans-Atlantic Public Economics Seminar", June 16-18, 2014 AB - This paper investigates how the 2009 one-time suspension of the Required Minimum Distribution (RMD) rules associated with qualified retirement plans affected plan distributions at TIAA-CREF, a large retirement services provider. Using panel data on retirement plan participants at TIAA-CREF, we find that roughly one third of those who were affected by minimum distribution rules discontinued their distributions in 2009. The results also show relatively small differences in the suspension probability between those who had 2008 distributions equal to the RMD amount, and might be classified as facing a binding RMD constraint, and those who were taking distributions in excess of the RMD amount before the distribution holiday. The probability of suspension declines substantially with age and rises modestly with economic resources. We find that individuals taking monthly distributions are less likely to suspend distributions than those taking annual distributions, particularly at higher wealth levels. This pattern is consistent with those who choose monthly distributions being more likely to use their distributions to finance consumption. We supplement these results based on administrative record data on retirement plan participants with survey evidence on participant attitudes that affected decisions about suspending distributions. Our findings provide guidance on the revenue consequences of changing RMD rules and offer insights about the role of various behavioral considerations, such as inertia, in modeling distribution behavior. ER -