IRAs draw lower contributions than workplace plans

Only 26 percent of Roth IRA holders contributed to their accounts in 2011, compared with just 6 percent of traditional IRA owners.

New data from the nonpartisan Employee Benefit Research Institute found that most contributions are made into a Roth IRA, while most of the assets are held in traditional IRAs that originated from a 401(k) plan rollover.

The median balance in a traditional IRA originating from a rollover was $110,918. Roth owners had lower average and median balances at $25,228 and $11,344. In EBRI’s IRA Database, nearly 13 times the amount of money was added to IRAs through rollovers than from new contributions.

EBRI found that more than 25 percent of all retirement assets in the United States are held in IRAs and overall, the total average IRA account balance in 2011 was $70,915, while the average IRA individual balance was $87,668. That total included all of the accounts an individual held, since many individuals own more than one IRA.

“The results show the importance of being able to measure an individual’s combined account balances to determine the potential total retirement savings he or she has by the aggregation of multiple accounts,” said Craig Copeland, EBRI senior research associated and author of the report.  

Men are better savers than women, with males having higher individual average and median balances in their IRAs than women. For men, the average balance was $114,745 and the median balance was $30,704. For women, the average account balance was $66,529 and the median was $21,642.

Of those individuals contributing, 47.2 percent contributed the maximum amount and just over half of those contributing to a traditional IRA contributed the maximum, while 43.6 percent did so with a  Roth IRA.

Younger investors contributed more to Roth IRAs than traditional IRAs, and people who contributed to their IRAs one year were more likely to contribute again the next year, according to the EBRI data.

The Employee Benefit Research Institute is a private, nonpartisan, nonprofit research institute based in Washington, D.C., that focuses on health, savings, retirement, and economic security issues.

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