Mitchell, Olivia SUtkus, Stephen PYang, Tongxuan (Stella)2023-05-232023-05-232005-01-012019-08-30https://repository.upenn.edu/handle/20.500.14332/43745This paper explores why plan sponsors design their 401(k) plans the way they do. Employing a unique, rich dataset of over five hundred 401(k) plans, we find that these plans are principally a form of tax-motivated compensation under the restriction of federal non-discrimination rules. In other words, to appeal to better-paid workers, employers offer more generous monetary and non-monetary plan design features. At the same time, complex federal tax rules restrict pay discrimination in favor of the highly-paid employees.©2005 Pension Research Council of the Wharton School of the University of Pennsylvania. All Rights Reserved.EconomicsWorking Paper