Rollovers Often Are Key in Traditional IRA Ownership
The majority of US households with traditional individual retirement accounts (IRAs) indicated their traditional IRAs included rollovers from workplace retirement plans, according to a survey released today by the
The study,"The Role of IRAs in US Households' Saving for Retirement, 2018," found that 58 percent of traditional IRA-owning households, or 19 million US households, indicated that their traditional IRAs contained rollovers from employer-sponsored retirement plans in 2018. Traditional IRA owners cited multiple reasons for rolling over their retirement accumulations, including avoiding leaving assets behind with a former employer (64 percent), preserving the tax treatment of the savings (60 percent), consolidating assets (54 percent), and having more investment options (54 percent). More than four in 10 traditional IRA-owning households with rollovers indicated that they also took advantage of contributions.
"Traditional IRAs, which are the most common type of IRA, provide a vital tool for American workers to preserve and grow their retirement savings over their careers," said
IRA Withdrawal Frequency Is Low
The study also found that traditional IRA-owning households rarely withdrew from their accounts and that most of the withdrawals are retirement related. Only 26 percent of traditional IRA-owning households in 2018 took withdrawals in tax year 2017, consistent with previous years. Eighty-five percent of households that made withdrawals were retired and only 5 percent of traditional IRA-owning households headed by individuals younger than 59 took withdrawals in tax year 2017.
Other key findings of the report include:
* One-third of US households owned IRAs in 2018. More than eight in 10 IRA-owning households also had accumulations in employer-sponsored retirement plans. More than 60 percent of all US households had either retirement plans through work or IRAs, or both.
* More than one-quarter of US households owned traditional IRAs in 2018. Traditional IRAs were the most common type of IRA owned, followed by
* IRA-owning households cover a wide range of incomes. In 2018, the majority of IRA-owning households had incomes less than
* Most traditional IRA-owning households have a planned retirement strategy. Nearly two-thirds of traditional IRA-owning households indicated they have a strategy for managing income and assets in retirement. Typically, these strategies have many components, often including reviewing asset allocations, determining retirement expenses, developing a retirement income plan, setting aside emergency funds, and determining when to take
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