Who Benefits from Increasing Contribution Limits for Defined-Contribution Plans?

Abstract

The package of increases in defined-contribution pension plan contribution limits that Congress enacted in 2001 could have benefited at most 8 percent of plan participants and 3 percent of all workers. High earners were potentially more likely to benefit than low earners, and potential beneficiaries generally had higher earnings than other participants. The increase in the percentage limit on combined employer and employee contributions was potentially of the most benefit to low and moderate earners. The increase in the dollar limit on combined employer and employee contributions was potentially of the least benefit to those workers.