Benefits

Retirement Savers Use IRAs to Consolidate Assets

December 18, 2012 (PLANSPONSOR.com) – Rollovers into traditional individual retirement accounts (IRAs) are playing an important role as households consolidate retirement assets.

By Rebecca Moore editors@plansponsor.com | December 18, 2012
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According to new data from the Investment Company Institute’s (ICI’s) annual survey of households owning IRAs, in May 2012, 45% of traditional IRA-owning households with rollovers in their traditional IRAs reported that consolidating assets was among the reasons for their rollovers, and 19% said it was the primary reason.  

The study paper, “The Role of IRAs in U.S. Households’ Saving for Retirement, 2012,” also found that taxes were forefront in savers’ calculations, with 67% of traditional IRA-owning households that have rollovers indicating that preserving the tax treatment of their accounts was a factor in their decision to make a rollover. Overall, 51% 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 data also indicates IRAs remain a steady component of the retirement system. In May 2012, 68% of U.S. households had retirement plans through work or IRAs. Forty percent of U.S. households owned IRAs.   

Traditional IRAs continue to be the most common type of IRA, with 33% of U.S. households owning them in May 2012. Ownership of Roth IRAs continued to edge up, and in May 2012, nearly 17% of U.S. households owned Roth IRAs. Nearly 8% of U.S. households owned employer-sponsored IRAs (SEP IRAs, SAR-SEP IRAs and SIMPLE IRAs).

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