When IRAs were created in 1974 under the Employee Retirement Income Security Act, one big motivator was to give workers who lacked access to a retirement plan at work a way to save for retirement in a tax-deferred account.
But according to a new brief from the Center for Retirement Research at Boston College, that's not what's happened. Instead, most of the new money flowing into IRAs these days comes from higher-income people, who often also have a 401(k) plan.
The less well off who lack opportunities to save in an employer-sponsored plan, for whom IRAs were originally intended, are instead largely using IRAs as a parking place for rollovers from employers that they've left behind on the way to another job.
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