Choi, James JLaibson, DavidMadrian, Brigitte C2023-05-232023-05-232006-01-012019-08-28https://repository.upenn.edu/handle/20.500.14332/43716It is typically difficult to determine whether households save optimally. But in some cases, savings incentives are strong enough to imply sharp normative restrictions. We consider employees who receive employer matching contributions in their 401(k) plan and are allowed to make discretionary, penalty-free, in-service withdrawals. For these employees, contributing below the match threshold is a dominated action. Nevertheless, half of employees with these clear-cut incentives do contribute below the match threshold, foregoing matching contributions that average 1.3% of their annual pay. Providing these “undersavers” with specific information about the free lunch they are giving up fails to raise their contribution rates.All findings, interpretations, and conclusions of this paper represent the views of the author(s) and not those of the Wharton School or the Pension Research Council. Copyright 2006 © Pension Research Council of the Wharton School of the University of Pennsylvania. All rights reserved.EconomicsWorking Paper