10 2 5 3 4 6 7 8 9 scope, but rely on payro and IRA rollovers that resulted from Silverm Copeland, Craig, “Characteris “Value of IRAs under Senate Tax R an, Celia, “IRA and Keogh Asse ll deduction. This is th tics of Individual R e 401(k) form ts Reach $773 Billion at Year-End 1992” ” EBRI Notes contributions would increase between 11 and 18 e case becau etirem, vol. 7, no. 6 (Employee Benefit ent Account Owners” se of the significant portion of the EBRI N EBRI Notes otes, vol. , IRAs in t Bibliography: he American Retirement Sys EBRI Issue Briefs on IRAs tem Statement for the 8 Sarah Holden and Jack VanDerhei, Can 401(k) Accumulations Generate Significant Income for Future Retirees? Research In Yakoboski, Paul. “Large Plan Lum workforce that is not paid through auto vol. 14, no. 11 (Em percentage points (depending on sa 22, no. 6 (Employee Benefit Research Institute, June 2001). stitute, Jun ployee Benefit Research Institute, November 1993). e 1986). p lary level) if pre-retirem Sum masted and linked payroll system : Rollovers and Cashouts.” ent withdrawals were never taken EBRI Issue Brief s. , no. 188 Copeland, Craig. “Individual Account Retirem 8 By Dallas Salisbury, E ent Plans: An Analysis of the 2004 Survey of BRI EBRI Issue Brief and ICI Perspective, October 2002. This is a first-order approximation and does not take into from (Em p IRA ba loyee Benefit Resear lances . ch Institute), August 1997. account changes in participant behavior that might occur as a result of changing the pre-retirement access to this Consumer Finances.” House Ways and Means Committee EBRI Issue Brief, no. 293 (Employee Benefit Research Institute), May ® “1985 Year-End IRA and Keogh Assets” Yakoboski, Paul, “New Evidence on Lum Copeland, Craig, “IRA Assets Continue to Grow” Working through our American Savings Education Council and our ChoosetoSave.org EBRI Notes p-Sum Distributions and Rollover Activity” EBRI Notes , vol. 7, no. 4 (Em , vol. 22, no. 1 (Em ployee Benefit Research ployee Benefit EBRI money. 2006. Chairman Neal and members of the Subcommittee on Select Revenue Measures, thank ® program Institute, April 1986). Notes Research In __________. “Retirem , vol. 14, no. 7 (Employee Benefit At the request of this Committee, the Ge s, and based upon our 18 year stitute, Janu ent Program ary 2001). Lum s of Retirem Research Institute, July 1993). p-Sum Distri neral Accountability Of ent Confidence Survey butions: Hundreds of Billion fice undertook a review s, EBRI has found that s in Hidden Select Revenue Measures Subcommittee 9 you for your invitation to Employee Benefit Research In testify today on the ro stitute, Small Employer Retireme le of individual retirem nt Survey Results. ent accounts, or IRAs, in individu of individual retirem Pension Incom als need to beco e.” EBRI Issue Brief ent accounts me convinced of the need that was published this m , no. 146 (Employee Benefit Res to save for the future b onth. The staff of the Employee earch Institute), February efore they will (a) do it, http://www.ebri.org/surveys/sers/. our retirem __________. “Individual Account Retirem ent system. I am Dallas Salisbur ent Plans: An Analysis of the 2001 Survey of y, president and CEO of the Employee Benefit “Medical IR and (b) preserve the funds upon j Silverm Benefit Research Institute was pleased to c Copeland, Craig, “Asset Allocation: 1994. an, Celia, “IRA and Keogh Assets As” EBRI Notes, vol. 7, no. 1 (Em ob change. W IRAs and 401(k)-Type P Show Increased Growth in 1991” ooperate with the GAO in ph lile $214.9 billion was rolled into IR oyee Benefit Research In lans” EBRI Notes their research. stitu EBRI Notes te, J , vol. 21, no. 10 anuAs in 2004, ary 1986). , vol. 13, 10 Research In Consumer Finances.” stitute. EBRI Issue Brief, no. 259 (Employee Benefit Research Institute), July The latest Value of Benefits Survey results can be found in Rachael Christensen, “Value of Benefits Constant in a most workers that receive di (Em no. 7 (Em ployee Benefit Research ployee Benefit Research In stributions of less Institute, October 2000). stitute, Juthan $20,000 do not roll over their entire ly 1992). 2003. Changing World: Findings from the 2001 EBRI/MGA Value of Benefits Survey.” EBRI Notes 13 , no. 3 (Employee “IRA/Keogh Assets Surpass $200 Billion” distributions, and cash out The GAO report does a good job of setting at least some portion of EBRI Notes their retirem out the current data on IRAs. , vol. 6, no. 5 (Em ent savings. ployee Benefit Bibliography: EBRI Notes on IRAs Benefit Research Institute, March 2003): 1—3. The Role of Individual Retirement Accounts Since beginning our work in 1978, the Employee Benefit Research Institute has Research In Copeland, Craig, “IRA Assets To Jones, Nora Super, “IRA Proposals and Thei stitute, September 1985). tal More Than $2 Trillion” r Potential Impact on Retirement Savings” EBRI Notes, vol. 21, no. 5 EBRI ® 11 published 317 __________. “Retirem EBRI Issue Briefs ent Plan Particip . The very first was on the subject of “Universal IRAs and ation and Features, and the Standard of Living of Employee Benefit Research Institute, Health Confidence Survey Results www.ebri.org/surveys/hcs/ (IRAs) in the U.S. Retirement System Notes (Employee Benefit Resear , vol. 13, no. 3 (Employee Benefit The report also points out the As GAO points out, there is a great deal we ch Institute, May 2000). lack of success in encourag Research Institute, March 1992). do not know about IRAs as a result of lim ing plan development among ited Copeland, Craig, “The Number of Individual Account Retirement Plans Owned by American Deductible Em Am 12 ericans 55 or Older.” ployee Contributions.” Since that EBRI Issue Brief, no. 248 (Em time we have published data on IR ployee Benefit Research Institute), As on an Kelly Olsen and Dallas Salisbury, “Individual Social Security Accounts: Issues in Assessing Administrative “IRA and Keogh Assets Top $120 Billion data reporting. Since 1995, EBRI has been work sm all employers due to lack of resources, uns ” EBRI Notes teady revenues, and lack ing with the Investm , vol. 5, no. 6 (Em e of knowledge and/or nt Com ployee Benefit pany Institute and Families.” EBRI Notes, vol. 29, no. 6 (Employee Benefit Research Institute, June 2008). August 2002. ongoing basis. Chapter 15 of the EBRI Databook on Employee Benefits is on IRA participation Feasibility and Costs,” EBRI Issue Brief no. 203, November 1998 (http://www.ebri.org/pdf/briefspdf/1198ib.pdf); June 26, 2008 Research In Silverm adm Copeland, Craig, “Lum misconceptions in how plans operate. inistrative firm an, Celia, “IRA and Keogh Asset Conti stitute, November 1984). s to build a large database p-Sum Distributions Total $87.2 Billion in 1995” on 401(k) plans that ha nue to Grow during First Half of 1991” s begun to allow m EBRI Notes, vol. 20, EBRI any 1 and and Chapter 16 is on “Individual Social Sec IRA urity Assets. Accounts: Ad ministrative Issues,” EBRI Issue Brief no. 236, September 2001 1100 Longworth HOB, Washington, DC questions to be answered about the no. 10 (Em Notes , vol. 13, no. 2 (Employee Benefit Res ployee Benefit Research Institu role of those plans in our retire te, October 1999). earch Institute, February 1992). ment system. This year we are Copeland, Craig, “Ownership of Individual Retirement Accounts (IRAs) and 401(k)-Type Plans” (http://www.ebri.org/pdf/briefspdf/0901ib.pdf) (Washington, DC: Employee Benefit Research Institute). __________. “Retirem ent Plan Participation and Retirees’ Perception of Their Standard of “IRA and Keogh Assets Continue Rising in 1983” starting to build a com Small employer surveys undertak panion database of IRA data en by EBRI in the past also that will begin to fill m EBRI Notes, vol. 5, no. 2 (Em pointed out the lack of any of the gaps in ployee Benefit EBRI Notes, vol. 29, no. 5 (Employee Benefit Research Institute, May 2008). Living.” Twenty-three percent of workers ages EBRI Issue Brief, no. 289 (Employee Benefit Resear 21–64 owned an IRA at the end of 2005, an ch Institute), January 2006. 13 Research In Sabelhaus, John, “Projecting IR inform Foley, Jill, “IRA and Keogh Assets employee dem ation identified by the GAO report. stitu and for the retirem te, March 1984). A Balances and W ent plans, wh Grow More Slowly in 1990” ere higher pay and/or ithdrawals” EBRI Notes EBRI Notes health insuranc , vol. 20, no. 5 , vol. 12, no. 6 e was Craig Copeland, “Lump Sum Distributions.” EBRI Notes, no. 12 (Employee Benefit Research Institute, December 2 increase from 15.9 percent in 1996. We know IRA ownership increases with fam 9 ily income and 2005): 7—17. (Em deem (Emp ped to be m loyee Benefit Resear loyee Benefit Research ore important in the view of e ch Institute, May 1999). Institute, June 1991). mployers. EBRI Value of Benefits surveys over Copeland, Craig, “Total Individual Account Retirement Plan Assets, by Demographics, 2004” Copeland, Craig, and Jack VanDerhei. “Personal A age: Among workers with annual family income of $10,000–$19,999, 8.3 percent owned an IRA, ccount Retirement Plans: An Analysis of the 10 “Major Growth in IRAs Reported” the past 25 years have consistently found As GAO notes, the IRS does co EBRI Notes llect a significant am that workers put health insurance first, , vol. 5, no. 3 (Em ount of I ployee Benefit Research RA information. W and our m ere that ost EBRI Notes, vol. 29, no. 3 (Employee Benefit Research Institute, March 2008). Survey of Consum compared to 35.1 percent of those with fam er Finances.” EBRI Issue Brief ily incom , no. 223 (Employee Benefit Research e above $75,000. We also know education Institute, May 1983). inform recen Yakoboski, Paul, “IRAs: Benchm Piacentini, Joe, “IRA Deduction El t EBRI Health Con ation more widely available in a tim fidence Surv arking for the P igibility Falls under TRA '86” eys have f ely fa ound that over a third of workers hav shion, it would be of great assistance to both the ost-TRA '97 WoEBRI Notes rld” EBRI Notes , vol. 12, no. 5 , vol. 19, no. e reduced Submitted by: Institute), July 2000. is a more striking indicator: 2.7 percent of those without a high school diplom 11 a have an IRA, public and the private sectors. For exam 12 (Em their re (Employee Benefit Resear tir ployee Benefit Research Institute, Decem ement savings due to ch Institute, May 1991). rising health care costs. ple, the Census Bureau’s Current Population Survey ber 1998). All of these trends affect plans with Copeland, Craig, “IRA Assets and Contributions, 2006” EBRI Notes, vol. 28, no. 12 (Employee compared to 46.5 percent of those with a graduate degree. “Surveys Show That Individual Reti reports that very few of those over age 55 a payroll deduction in general, and program rement Accounts (IRAs) Are Popular” s nd 65 report incom like non-employer-based IR e from IRAs, Keoghs or 401(k) As (where autom EBRI Notes, vol. 4, atic Benefit Research Institute, December 2007). Dallas Salisbury EBRI Staff. “Em ployment-Based Retirement Income Benefits: Analysis of the April 1993 no. 2 (Em plans. Yet, the IRS tax records recorded $140 bi Fronstin, Paul, “IRA Assets Grew by 23 Percent During 1997” deductions have not been arranged). Foley, Jill, “IRA and Keogh A ployee Benefit Research In ssets Continue to Grow” stitute, March 1983). llion in payments out of IRAs alone in 2004. EBRI Notes EBRI Notes , vol. 11, no. 7 (Employee , vol. 19, no. 12 Employee Benefit Research Institute (EBRI) Current Population Survey.” IRAs have become the largest single vehicle EBRI Issue Brief, no. 153 (Em for retirem ployee Benefit Research In ent assets in the United States. stitute), The Federal Reserve’s S (Em Benefit Research In ployee Benefit Research Institu stitute, July 1990). urvey of Consum te, Decem er Finance, and the HHS Health and Retirem ber 1998). ent Copeland, Craig, “401(k)-Type Plans and Individual Retirement Accounts (IRAs)” EBRI Notes, T-154 Septem Assets have continuously grown in IRAs as a fu ber 1994. nction of new contributions (about $49 billion in Survey, also under-report incom “IRA Assets Show Significant Growth” The GAO has pointed out the lack of infor e from these prog EBRI Notes ram mation on the use of payroll deduction IRAs , vol. 3, no. 3 (Em s, when it is possible to com ployee Benefit Research pare individual vol. 28, no. 10 (Employee Benefit Research Institute, October 2007). the m ost recent year for which data are available), but the asset growth is mostly due to rollover self Institute, May 1982). Fronstin, Paul, “IRA and Keogh Assets (or those that allow a direct debit from a Davis, Jennifer, “IRA and Keogh Asse -response with “administrative” records like tax retu ts Grow during First Half of 1989” Grew by 16 Percent During 1996” savings or checking account rns. A major issu ). GAO does not discuss e f EBRI Notes EBRI Notes or the nation , vol. 11, , vol. 18, distributions from __________. “Universal IRAs and Deductib both employment-based defi le E ned benefit (pension) and defined contribution mployee Contributions.” EBRI Issue Brief, no. 1 revolves around the financial status no. 12 (Em this topic on IRAs, but the data is lacking rega no. 1 (Empl poyee Benefit Research In loyee Benefit Research Institu of those near or in retirem stitute, J te, Decem ardless. This is another m nuary 1990). ber 1997). ent, and the availability of IRS anner to get workers’ Copeland, Craig, “IRA Assets, Contributions, and Market Share” EBRI Notes, vol. 28, no. 1 3 (Em retirem ployee Benefit Research ent plans such as 401(k)s (m Institute), January 1982. ore than $210 billion, according to the latest data). As a “IRAs in the American Retirement System” adm dolla inistrative records could m rs into an IRA before the individual can spend it. ake a significant contribution to policy-making. We hope that the (Employee Benefit Research Institute, January 2007). result, total IRA assets now exceed the assets in private-sector employment-based defined IRA adm Yakoboski, Paul and Bill Pierron, “I Davis, Jennifer, “IRA/Keogh Assets Top $400 Billion inistrative records databaseRAs: It' being deve s a Whole New Ballgam loped by EBRI will do s ” EBRI Notes, vol. 10, no. 7 (Employee e” EBRI Notes o as well. , vol. 18, no. Endnotes contribution plans: IRA asse Holden, Sarah, and Jack VanDerhei. “The Infl ts reached $4.75 trillion at y uence of Autom ear-end 2007, com atic Enrollme pnt, Catch-Up, and ared with $3.49 9 (Em Benefit Research In ploye The GAO re e Benefit Research Institute, Septem stitute, July 1989). port suggests tax credits to em ber 1997). ployers (on p. 29) to increase the adoption of Copeland, Craig, “IRA and Keogh Assets and Contributions” EBRI Notes, vol. 27, no. 1 4 IRA Contributions on 401(k) Accumulations at R trillion in private-sector defined contribution plans. etirem The Inte ent.” EBRI Issue Brief rnal Revenue Servic , no. 283 e (IRS) reports 1 payroll deduction IRAs. Congress wi EBRI DAs the GAO report und atabook of Employee Benefe its, Ch rlines, the p ap ll need to consider the fact th ter 15, rInd imary role o ividual Retirem f IRAs in our retirem ent Accoun at tax credits to em t - Particip eatio nt system n ployers for today is (Employee Benefit Research Institute, January 2006). (Em that 7.9 m ployee Benefit Research illion taxpayers age 65 or older wit Institute), July 2005. hdrew money from an IRA in 2004, amounting to to provide a tax-deferred account starting these plans have proven to Yakoboski, Paul, “IRA and Keogh Assets Grew “IRA, Keogh Asset Growth Slows” for the retirem be ineffective. The EBRI Sm EBRI Notes, vol. 9, no. 12 (Em by 16 Percent During 1996” ent assets of those who have left an employer- all Em ploye ple Benefit Research oyer Surveys found that EBRI Notes, vol. 5 http://www.ebri.org/pdf/publications/books/databook/DB.Chapter%2015.pdf and EBRI Databook of Employee $76.8 billion. sponsored defined benefit (pension) or define sm 17, no. 12 (Em Institute, Decem all employers do not understand ployee Benefit Resear ber 1988). the tax laws surrounding plans. ch Institute, d contribution (401(k)-t December 1996). ype) plan. Rollovers Benefits, Chapter 16, Individual Retirement Accounts and Keogh Assets Copeland, Craig, “401(k)-Type Plan and IRA Ownership” EBRI Notes, vol. 26, no. 1 (Employee Korczyk, Sophie. “Individual Savings for Retirem ent: A Closer Look.” EBRI Issue Brief, no. 16 am ounted to $214.9 billion in 2004, compared to $48.7 billion in contributions. Benefit Research Institute, January 2005). http://www.ebri.org/pdf/publications/books/databook/DB.Chapter%2016.pdf (Employee Benefit Research Since IRAs have been in Institute), March 1983. creasingly important to Americans’ retirement security, EBRI Fronstin, Paul, “IRA and Keogh Assets “IRA/Keogh Asset Growth Slows in 1987” EBRI Small Employer Surveys also have found Grew by 6 Percent During 1994” EBRI Notes, vol. 9, no. 6 (Em overall opposition to pro p EBRI Notes loyee Benefit posals th , vol. 16, at small 2 has focused a lot of its research on IRAs. For a 2001 NASI conference, EBRI simulated the Craig Copeland, “Ownership of Individual Retirement Accounts (IRAs) and 401(k)-Type Plans.” EBRI Notes, no. em no. 11 (Em Research In ployers be required to The goal that ERISA set for IRAs in 1974 as a way for pstitu loyee Benefit Research Institu te, June 1988). set up arrangements w te, No ith f vem inancial institu ber 1995). all of those outside of an tions. However, there is Copeland, Craig, “IRA and Keogh Assets and Contributions” EBRI Notes 6 , vol. 25, no. 8 5 (Employee Benefit Research Institute, May 2008): 2—12. Salisbury, D projected increas allas. “Individual Re e in the IRAs imtire portance in re ment Accounts: Char tirement wealth. acteristic At that tim s and Policy Im e, we estim plication ated an s.” employer based plan support am ong small e to save for retirem mployers for sending additional ent has not been rea retirem lized ent contributions as part of their . This underlines the central (Employee Benefit Research Institute, August 2004). 3 EBRI Issue Brief increase from 28 percent of retirem , no. 32 (Employee Benefit Res ent wealth for m earch Institute ales born in 1936 to 40 percent for m ), July 1984. ales Victoria L. Bryant, “Accumulation and Distribution of Individual Retir ement Arrangements, 2004,” SOI Bulletin role played by both Social Security and em existing payroll tax deposits and le Murray, Kathy Stokes and Paul Yakoboski, “IRA, Keogh Assets Top $350 Billion” tting the governm EBRI Notes ployer-sponsored plans in Americans’ future “Congress Considers IRA Expansion” , vol. 8, no. 11 (Em ent deal with all ofp the adm loyee Benefit Research inistrative issues. EBRI Notes, born in 1964. Fe (Spring 2008): 90–101 m. ales were estimated to have an increase from 18 percent to 32 percent for the retirem vol. 16, no. 4 (Em Institute, Novem e nt security. ber 1987). ployee Benefit Research Institute, April 1995). Copeland, Craig, “IRA and Keogh Assets” EBRI Notes, vol. 25, no. 2 (Employee Benefit __________. “Individual Saving for Retirem sam 4 e birth cohorts. Since that time, the increased ent--T im he 401(k) and IRA Experiences.” portance of 401(k) plans, and the likely plan EBRI Issue Board of Governors of the Federal Reserve, Flow of Funds Accounts of the United States: Flows and This suggests that proposals like those discussed in the GAO report for “automatic IRAs” Research Institute, February 2004). Brief design m , no. 95 (Em odifications that are lik ployee Benefit Res ely to result from the passage earch Institute), October 1989. of the Pension Protection Act Outstandings: First Quarter 2008. June 5, 2008 for som “IRA Assets Yakoboski, Paul, “IRA Eligibility and Usage” e segm Reach $262 Billion ent of the population (most propos ; Keogh Assets Nearly $42 Billion EBRI Notes als would no , vol. 16, no. 4 (Em t apply to ab ” EBRI Notes out 25 m ployee Benefit , vol. 8, no. 6 illion workers (PPA) in 2006 will undoubtedly result in an even larger percentage of retirement wealth 5 in very sm Research In (Em Bryan ployee Benefit Research t, I thank the Comm op cit all firm stitu ed. te, April 1995). s) would need to be carefully ittee again for Institute, June 1987). the invitation to testify. designed in order to prove successful. In fact, The Em Copeland, Craig, “IRA Assets and ployee Benefit Research Institute (EBRI) is a 7 Characteristics of IRA Owners” nonprofit, nonpartisan research institute that focuses EBRI Notes, vol. 23, no. 12 Scott, Jason S., and John B. Shoven. “Lum contained in IRAs. p-Sum Distributions: Fulfilling the Portability 12 6 research conducted by E BRI on the administrative issues in individual Social Security accounts on health, retirement, and economic security issues. EBRI does not take policy positions and does not (Employee Benefit Research Institute, December 2002). Jack VanDerhei and Craig Copeland, (2002). The Future of Retirement Income: The Changing Face of Private Prom ise or Eroding Retirement Security?” EBRI Issue Brief, no. 178 (Employee Benefit suggests ways in which an “autom lobb “IRA, Keogh Assets Ju Fronstin, Paul and Celia Silverm y. www.ebri.org mp $70 Billion; Future an, “IRA a atic IRA” coul nd Keogh Assets Grew 19 Percent During 1993” Grd be m owth May Slow Because of Tax Refor ade available to all workers, were m” EBRI Retirement Plans (pp. 121-147). National Academy of Social Insurance: The Future of Social Insurance: Research In The values accum stitute), October 1996. ulated in IRAs would likely be even greater if all monies contributed In cremental Action or Fundamental Reform. access Notes EBRI Notes , vol. 7, no. 10 (Employee Benefit Re ibility , vol. 15, no. 10 (Em and accumulation the p ployee Benefit Research Institute, October 1994). rimary objectives. It cou search Institute, October 1986). ld be done with lower Copeland, Craig, “Lump-Sum Distributions: An Update” EBRI Notes, vol. 23, no. 7 (Employee and/or rolled over to these accounts were not available for pre-retirement withdrawals. 7 adm inistrative expense and lower business burden than proposals that are more limited in their Benefit Research In Jack VanDerhei and Craig C stitute, July 2002). opeland, The Impact of PPA on Retirement Income for 401(k) Participants, EBRI Seliger, M. “Retirem Simulations from the EBRI/ICI 401(k) Accum ent Income and Individual Retirem ulation Projection Model in 2002 showed that the ent Accounts.” EBRI Issue Brief, no. 52 Issue Brief, No. 318, June 2008 th incom (Employee Benefit Research e replacement rates that could be expected Institute), March 1986. from a combination of 401(k) account balances Employee Benefit Research Institute, 1100 13 Street, NW, Suite 878, Washington, DC 20005 Dal Dal Dal Dal Dal Dal Dal Dal Dall l l l l l l l la a a a a a a a as s s s s s s s s Sal Sal Sal Sal Sal Sal Sal Sal Sali i i i i i i i is s s s s s s s sb b b b b b b b bu u u u u u u u ur r r r r r r r ry, EBR y, EBR y, EBR y, EBR y, EBR y, EBR y, EBR y, EBR y, EBRI— I— I— I— I— I— I— I— I—H H H H H H H H Ho o o o o o o o ou u u u u u u u us s s s s s s s se Way e Way e Way e Way e Way e Way e Way e Way e Ways s s s s s s s s an an an an an an an an and M d M d M d M d M d M d M d M d Me e e e e e e e ean an an an an an an an ans C s C s C s C s C s C s C s C s Co o o o o o o o om m m m m m m m mm m m m m m m m mi i i i i i i i it t t t t t t t tt t t t t t t t tee St ee St ee St ee St ee St ee St ee St ee St ee Stat at at at at at at at ate e e e e e e e em m m m m m m m ment ent ent ent ent ent ent ent ent— — — — — — — — —2 2 2 2 2 2 2 2 26 6 6 6 6 6 6 6 6 J J J J J J J J June une une une une une une une une 2 2 2 2 2 2 2 2 20 0 0 0 0 0 0 0 008 08 08 08 08 08 08 08 08