Low-income Americans who participate fully in a 401(k) plan or similar tax-deferred savings plan can pay more taxes over the course of their lifetimes, according to new research from the Federal Reserve Bank of Cleveland.

A 25-year-old couple that earns initially $50,000 a year with a 6% real rate of return would raise its tax bill by 1.1% and lower its lifetime expenditures by 0.4% if they participate fully in a 401(k) plan. If the couple earns an 8% real rate of return, the lifetime tax increase is 6.4% and lifetime spending reduction is 1.7%.

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