Who contributes to Individual Retirement Accounts?

Abstract

The brief's key findings are: (1) IRAs were intended to give those without an employer plan access to a tax-deferred savings vehicle. (2) Today, IRAs hold nearly half of all private retirement assets, but most of these funds are rollovers from 401(k)s, rather than contributions. (3) The 14 percent of households who do contribute to IRAs include: (a) higher-income dual-earners who also save in a 401(k); (b) moderate-income singles or one-earner couples, often with a 401(k); and (c) higher-income entrepreneurs with no current 401(k). (4) One way to turn IRAs back into an active savings vehicle – one used more for contributions – is to auto-enroll all workers without an employer plan in an IRA.