Rollovers into traditional individual retirement accounts (IRAs) are playing an important role as households consolidate retirement assets, according to new data in ICI's annual survey of households owning IRAs. Specifically, in
The paper, The Role of IRAs in U.S. Households' Saving for Retirement, 2012, also found that taxes were forefront in savers' calculations with 67 percent of traditional IRA-owning households with rollovers indicating that preserving the tax treatment of their accounts was a factor in their decision to make a rollover. Overall, 51 percent of traditional IRA-owning households reported that their traditional IRAs contained rollovers from employer-sponsored retirement plans and these households tended to roll over the entire employer-sponsored plan balance.
"The research finds that traditional IRAs help individuals achieve retirement security by allowing them to consolidate and manage their retirement assets as they change jobs and move through their careers," said
IRA Ownership Remains Steady as Component of Retirement System
The paper also examines IRA ownership as part of the broader retirement system, finding in
Forty percent of U.S. households owned IRAs:
Traditional IRAs continue to be the most common type of IRA, with 33 percent of U.S. households owning them in
Ownership of Roth IRAs continued to edge up, and in
Almost 8 percent of U.S. households owned employer-sponsored IRAs (SEP IRAs, SAR-SEP IRAs, and SIMPLE IRAs).
Thirty-two percent of U.S. households had IRAs and had employer-sponsored retirement plans (defined contribution [DC] plan accounts or defined benefit [DB] plan coverage), and 8 percent of U.S. households only owned IRAs.
Twenty-eight percent of U.S. households reported having employer-sponsored retirement plans, but no IRAs.
Investment Professionals Often Assist IRA Owners
The study also finds that investment professionals play a significant role for traditional IRA-owning households. In 2012, three-quarters of traditional IRA-owning households held their traditional IRAs through investment professionals (e.g., full-service brokerage, independent financial planning firm, bank or savings institution, or an insurance company). Nearly seven in 10 traditional IRA-owning households have developed a strategy to manage assets and income in retirement, and 60 percent of those with a strategy said an investment professional was the primary source used to create the strategy.
"Traditional IRA-owning households tend to be good stewards of their traditional IRA assets," said Holden. "In addition, they seek assistance at key decision points in the process of managing their accounts."
Other Findings on IRA Contribution and Withdrawal Activity
IRA contribution activity remained steady. Sixteen percent of U.S. households contributed to any IRA in tax year 2011, compared with 14 percent in tax year 2010. This means that 39 percent of IRA-owning households in
Withdrawals from traditional IRAs continued to be infrequent and mostly retirement-related. Twenty-one percent of traditional IRA-owning households in
Traditional IRA owners generally plan to hold off on making IRA withdrawals until required to do so by law. Sixty-five percent of traditional IRA-owning households not making withdrawals in tax year 2011 indicated it was unlikely they would withdraw from their traditional IRAs before required at age 70 1/2. Living expenses and emergency expenses were the two most frequently mentioned expected future uses of IRA savings.
The study reports information from two separate ICI household surveys. ICI's 2012
The study was coauthored by Holden and
TNS MD66 121218-4143989 61MariaDonald
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