EBRI Notes

'Ownership of Individual Retirement Accounts (IRAs) and 401(k)-Type Plans' and 'The Basics of Medicare: Updated With the 2008 Board of Trustees Report'

May 13, 2008 20  pages


Ownership of Individual Retirement Accounts (IRAs) and 401(k)-Type Plans

Most recent data—This article uses the most recent SIPP data from the U.S. Census Bureau to examine the prevalence of IRAs and 401(k)-type plans among workers ages 21?64.

Number of 401(k) plans and participants slows, IRA assets grow sharply—The number of 401(k)-type plans and the number of participants in those plans, which had grown sharply through the 1990s, have subsequently grown at a slower pace. Ownership of both 401(k)-type plans and IRAs has risen significantly, as have assets in 401(k)-type plans and IRAs.

IRA growth from rollovers—While IRAs have become the largest single vehicle of retirement assets in the United States, the growth continues to be due to rollovers from other tax-qualified retirement plans, and not from new contributions.

Roth IRAs get most growth, traditional IRAs have most assets—Most new IRA contributions are going to the tax-free-on-withdrawal (nondeductible) Roth IRAs, not traditional (taxable-on-withdrawal) IRAs. But traditional IRAs hold the bulk of IRA assets.

Maximum IRA contribution—In 2005, about 27 percent of IRA owners contributed the maximum amount allowed by law, less than half the rate in 1996, when the contribution limit was half as much as it was in 2005. The data show that contributions to individual account retirement plans are strongly influenced by demographic factors—chiefly income, education, and race.

The Basics of Medicare: Updated With the 2008 Board of Trustees Report

Latest data—The Social Security Board of Trustees in March released the 2008 update for the trust funds of the Medicare program, the federal health care insurance program for the elderly and disabled. The Health Insurance Trust Fund is expected to begin using interest earnings to cover the excess of expenditures over tax income in 2008, trust fund assets will begin to be used to cover the excess beginning in 2011, and the trust fund is expected to be exhausted by 2019.

Financing—In 2007, expenditures in the Medicare program equaled 3.18 percent of gross domestic product (GDP). By 2080, that share is estimated to grow to 10.69 percent of GDP.