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U.S. Master Pension Guide

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CCH® PENSION AND BENEFITS — 2/14/08

IRA savers preserving retirement assets as long as possible: ICI study

Most individual retirement account (IRA) owners are taking a long-term view of their retirement income and assets and tend to preserve their IRA assets as long as possible, according to a new study by the Investment Company Institute (ICI).

While only 14% of U.S. households contributed to traditional or Roth IRAs in tax-year 2006, according to the study, IRAs are nevertheless owned by 46 million U.S. households and hold more than $4.6 trillion in assets. IRA assets represent more than one-quarter of Americans’ retirement assets and 10 percent of all household financial assets, according to the ICI. About 60% of traditional IRAs contain rollovers from employer-sponsored retirement plans.

Fewer than 1 in 5 took withdrawals

The study found that IRA savers are shepherding these funds and making responsible financial plans, according to ICI president Paul Stevens. Most households with IRAs plan to preserve their IRA assets as long as possible. Fewer than one in five households with traditional IRAs took withdrawals during 2006, according to the ICI, and 62% of those that did withdraw funds did so in order to comply with the required minimum distribution rules for those reaching age 70 1/2. Of those households not currently taking withdrawals, seven out of 10 said they were unlikely to take withdrawals prior to age 70 1/2.

According to Sarah Holden of the ICI, their survey showed that “retirement savers are acting responsibly…Whether they are accumulating assets in their 401(k), rolling over those assets into IRAs when they change jobs or retire, or taking measured withdrawals, they tend to adopt a sound long-term perspective.”

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