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CCH® PENSION — 06/30/11

EBRI research looks at how IRA owners invest their assets

Nearly 40% of IRA assets are invested in equities, just over 20% in money funds, 12% are in balanced funds and almost 14% are in other types of investments, according to findings from the Employee Benefit Research Institute (EBRI) IRA DatabaseTM. The Database is an ongoing project of the EBRI that collects data from IRA plan administrators and currently contains information on 14.1 million accounts of 11.1 million unique individuals with total assets of $732.9 billion, as of year-end 2008.

Among the key findings in the Database:

Allocations by balance size. The EBRI study found that as the account balance of the IRA increases, the percentage of assets allocated to equities and balanced funds decline.

Gender allocations. The asset allocations of male and female IRA owners is very similar across all age groups, the study found.

"Extreme allocations." Extreme asset allocations are defined as having less than 10% or more than 90% of the account balance in one particular asset. EBRI found that IRA owners with higher account balances are less likely to have extreme asset allocations. For instance, 38.3% of those with an account of $5,000-$9,999 had 90% or more of their assets in equities, compared with 5.9% of those with an account balance of $250,000 or more. Roth IRA owners are much more likely to have 90% or more of their assets in equities than those who own the other IRA types, the EBRI study found.

"It's interesting to note that IRA assets are invested in stocks (equities) at a level that's very close to what's in 401(k)s," said Craig Copeland, senior research associate at EBRI and author of the report. Specifically, Copeland said, the latest data from the EBRI/ICI 401(k) database, the largest of its kind, shows that 37.4% of all 401(k) assets are invested in equities. That matches closely to the equity level that was found in IRA accounts (38.5%).

Source: EBRI press release #925, May 24, 2011.

For more information, visit http://www.wolterskluwerlb.com/rbcs.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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