TY - JOUR AU - Beshears, John AU - Choi, James J AU - Laibson, David AU - Madrian, Brigitte C TI - Does Front-Loading Taxation Increase Savings? Evidence from Roth 401(k) Introductions JF - National Bureau of Economic Research Working Paper Series VL - No. 20738 PY - 2014 Y2 - December 2014 DO - 10.3386/w20738 UR - http://www.nber.org/papers/w20738 L1 - http://www.nber.org/papers/w20738.pdf N1 - Author contact info: John Beshears Harvard Business School Baker Library 439 Soldiers Field Boston, MA 02163 E-Mail: jbeshears@hbs.edu James J. Choi Yale School of Management 165 Whitney Avenue P.O. Box 208200 New Haven, CT 06520-8200 E-Mail: james.choi@yale.edu David Laibson Department of Economics Littauer M-12 Harvard University Cambridge, MA 02138 Tel: 617/496-3402 Fax: 617/495-8570 E-Mail: dlaibson@gmail.com Brigitte C. Madrian 730 B N. Eldon Tanner Building Brigham Young University Provo, UT 84602-3113 Tel: 801-422-4248 E-Mail: brigitte_madrian@byu.edu M1 - published as John Beshears, James J. Choi, David Laibson, Brigitte C. Madrian. "Does Front-Loading Taxation Increase Savings? Evidence from Roth 401(k) Introductions," in Roger Gordon and Christian Keuschnigg, organizers, "Personal Income Taxation and Household Behavior (TAPES)" Elsevier, Journal of Public Economics, Volume 151 (2016) M3 - presented at "International Social Security", September 26-28, 2013 AB - Can governments increase private savings by taxing savings up front instead of in retirement? Roth 401(k) contributions are not tax-deductible in the contribution year, but withdrawals in retirement are untaxed. The more common before-tax 401(k) contribution is tax-deductible in the contribution year, but both principal and investment earnings are taxed upon withdrawal. Using administrative data from eleven companies that added a Roth contribution option to their existing 401(k) plan between 2006 and 2010, we find no evidence that total 401(k) contribution rates differ between employees hired before versus after Roth introduction, which implies that take-home pay declines and the amount of retirement consumption being purchased by 401(k) contributions increases after Roth introduction. We reject several neoclassical explanations for our null finding. Results from a survey experiment suggest two behavioral explanations: (1) employee confusion about and neglect of the tax properties of Roth balances and (2) partition dependence. ER -