State Auto-IRA Policies and Firm Behavior: Lessons from Administrative Tax Data

Adam Bloomfield; Lucas Goodman; Manita Rao; Sita Slavov

doi:10.3386/w32817

State Auto-IRA Policies and Firm Behavior: Lessons from Administrative Tax Data

Adam Bloomfield, Lucas Goodman, Manita Rao & Sita Slavov

Working Paper 32817

DOI 10.3386/w32817

Issue Date August 2024

Revision Date April 2025

Several states have recently attempted to boost retirement saving by adopting “auto-IRA” policies that require employers not currently offering an employer-sponsored retirement plan (ESRP) to either (1) establish an ESRP or (2) enroll employees in state-facilitated Individual Retirement Accounts (IRAs). We identify the effect of these state policies on firm decisions to offer ESRPs, exploiting the phased rollout of these policy treatments across states and employer size categories. Using U.S. tax microdata, we estimate that about 17% of treated firms have been induced to offer an ESRP by these policies, although there is substantial heterogeneity in these effects across firm and worker characteristics. This effect is large considering that, for employers, establishing and maintaining an ESRP is more costly than utilizing the state-facilitated IRAs. We explore both rational and behavioral explanations for why firms might choose the higher-cost option to comply with state auto-IRA policies.

We are grateful to Angela Antonelli, Jacob Berman, Christine Cheng, Gopi Shah Goda, Sreeraahul Kancherla, Kim Olson, Paul Organ, Shanthi Ramnath, Melanie Wallskog, and Andrew Whitten, as well as seminar participants at Texas Tech University’s Free Market Institute, and attendees of the Treasury Department’s Office of Tax Analysis Research Conference, the 117th Annual Conference on Taxation, and the 2024 APPAM Fall Research Conference for helpful input. This research was conducted while Goodman was an employee at the U.S. Department of the Treasury. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors and do not necessarily reflect the views or the official positions of the U.S. Department of the Treasury, AARP, FDIC, or the U.S. Government. Any taxpayer data used in this research was kept in a secured Treasury or IRS data repository, and all results have been reviewed to ensure that no confidential information is disclosed. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.

Sita Slavov
In addition to my compensation from George Mason University, I have received significant financial support during the past three years from the following organizations: 1) The Alfred P. Sloan Foundation through the National Bureau of Economic Research, Stanford University, and George Mason University 2) The American Enterprise Institute 3) The TIAA Institute through George Mason University 4) The Peter G. Peterson Foundation
MARC RIS BibTeΧ
- August 5, 2024

State Auto-IRA Policies and Firm Behavior: Lessons from Administrative Tax Data

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