However, the October 2007 EBRI Notes article also reports that the growth of defined contribution (DC) plans has topped out, according to an EBRI news release. There was a sharp increase in the number of DC plans and the number of participants in those plans during the 1990s, but the numbers had leveled off by 2004.
The number of DC plans hit almost 687,000 in 2000, and was down to less than 636,000 in 2004, while the number of DC participants reached 52.9 million in 2002 and was down to 52.2 million in 2004, the news release said.
As for assets, the most recent data show that as of 2006, about $7.5 trillion in assets were held in IRAs and private-sector defined contribution plans, up from about $4.8 trillion in 2000. Additionally, the percentage of workers owning a 401(k)-type plan or an IRA has risen significantly. Just over 40% of workers ages 21 – 64 owned a 401(k)-type plan or an IRA in 2004, up from 34% in 1996.
The October 2007 EBRI Notes report also indicates:
- In 2004, about 38% of IRA owners contributed the maximum amount allowed by law, almost half the rate in 1996.
- Most new IRA contributions are going to nondeductible Roth IRAs, not traditional IRAs.
- The major source of IRA growth continues to be rollovers from other tax-qualified retirement plans, not from new contributions.
- Contributions to individual account retirement plans are strongly influenced by demographic factors – chiefly income, education, and race.
Despite this growth in individual account plans, a majority of Americans still do not have a retirement plan, the article says.
The full article can be found at www.ebri.org .