Since its creation almost 30 years ago, the Individual Retirement Account (IRA) has become one of the nation’s most important retirement savings tools. “Two generations of Americans have benefited from IRAs,” said Investment Company Institute President Paul Schott Stevens, in a press release. “This thirtieth anniversary is a notable milestone.”
The number of households owning IRAs increased from 29 million in 1996 to 45.2 million in 2003, with over $3 trillion invested in the accounts of which $1.3 trillion lies in mutual funds, according to the news release. IRAs were created as an incentive for workers to save for their retirements.
Workers can contribute $3,000 this year to IRAs. Assets can grow free of current federal income tax liability. The contribution level will increase to $4,000 in 2005 and to $5,000 in 2008.