U.S. employers and the federal government devote the equivalent of 1.5% of GDP annually toward promoting defined contribution (DC) retirement savings. Using a new employer-employee linked dataset covering millions of Americans, we show that tax and employer matching incentives disproportionately benefit White and Asian workers compared to their similar-income Hispanic, Black, and American Indian or Alaska Native coworkers. Similarly, these incentives disproportionately benefit those with richer parents compared to those from lower-income families. Breaking the link between contribution choices and saving subsidies through revenue-neutral reforms could close up to one-third of the DC wealth gaps by race and parental income.
