Individual Retirement Accounts (IRAs) rapidly became a very popular form of saving after they became available to all employees in 1982. Annual contributions grew from about $5 billion in 1981 to about $38 billion in 1986. Preliminary data indicate that contributions declined precipitously after the Tax Reform Act of 1986, even though the legislation limited the tax deductibility of contributions only for families who have annual incomes over $40,000 and who are covered by a firm pension plan. Whereas over 15 percent of tax filers made contributions in 1986, only 7 percent contributed in 1987. Two claims received considerable attention in the legislative debate over the tax treatment of IRAs. One was that the accounts were held primarily by the wealthy, a claim that is not supported by the data. Although wealthier households are much more likely than poor households to have IRAs, approximately two-thirds of accounts are held by households with incomes less than $50,000. The second claim was that IRAs produced no net saving, funds were simply transferred from other saving balances, or, if there was new saving, it would have taken place anyway. In earlier papers [Venti and Wise 1986, 1987a, 1987b, 1988b; Wise 19871 we analyzed the relationship between IRA saving and other financial asset saving. Those studies were based on household data from the 1983 Survey of Consumer Finances (SCF) and the 1980-1985 Consumer Expenditure Surveys (CESs). At most, the evidence from these studies showed only a very modest substitution of IRA for other forms of saving; indicating that the net saving effect was substantial. Recent analysis by Feenberg and Skinner [1988], using a panel of individual tax returns for 1980-1984 also finds little evidence of substitution.