EBRI Issue Brief
EBRI IRA Database: IRA Balances, Contributions, Rollovers, Withdrawals, and Asset Allocation, 2016 Update
This Issue Brief is the eighth annual cross-sectional analysis of the EBRI IRA Database. It includes results on the distribution of individual retirement account (IRA) types and account balances, contributions, rollovers, withdrawals, and asset allocation in IRAs for 2016, the latest data available.
The EBRI IRA Database is an ongoing project of the Employee Benefit Research Institute (EBRI) that collects data from a wide-ranging group of IRA-plan administrators. For year-end 2016, it contains information on 24.2 million accounts owned by 19.1 million individuals, with total assets of $2.36 trillion. For accounts in the database, the IRA type, account balance, contributions made, rollovers transferred, withdrawals taken during the year (if any), the asset allocation, and certain demographic characteristics of the account owner are included (among other items).
This update shows the importance of being able to measure not only the unique IRA account balances, but also the combination of all IRAs an individual owns to determine the potential total retirement savings the individual has by aggregating their multiple IRA accounts. Indeed, the overall, cumulative IRA average balance per individual is 27 percent larger than the IRA balance per account. Thus, databases that are not able to link separate accounts owned by the same individual within and across data providers are likely to understate the total IRA assets owned by individuals, and thus the total retirement accumulations held by individuals.
Here are the key findings in this annual update:
- The average IRA account balance in the database was $97,515 at year-end 2016 and the average IRA individual balance (combining all accounts owned by the individual) was $123,973.
- Average IRA account balances differed significantly by the IRA type: Roth IRAs had the lowest average balance, while Traditional IRAs originating from rollovers had the highest average balance.
- Just under 11 percent of all accounts in the database received a contribution in 2016, but Roth IRAs were more likely to receive a contribution than Traditional IRAs (24.9 percent vs. 5.5 percent).
- Rollovers to IRAs in 2016, regardless of the source, amounted to over 16 times more than the total contributions in the database, with the average and median rollover to a Traditional IRA in 2016 being $94,238 and $21,383, respectively.
- Almost 24 percent of individuals owning a Traditional or Roth IRA took a withdrawal in 2016, including 27.1 percent of Traditional IRA owners.
- The overall IRA withdrawal percentage was largely driven by activity among individuals ages 70-½ or older owning a Traditional IRA—the group required to make withdrawals under the required minimum distribution (RMD) rules. In contrast, among owners under age 60, fewer than 12 percent of any age group had a withdrawal. Withdrawals from Traditional IRAs are more likely to occur than from Roth IRAs, regardless of age.
- Fewer than one-quarter of IRA owners ages 71 or older were found to have withdrawn an amount from their Traditional IRA in excess of their RMD.
- One-half of all IRA assets were allocated to equities, although this varied with owner age, account balance, and IRA type. There were minimal differences in asset allocations trends by gender.
- Those owning Traditional IRAs had, on average, lower allocations to equities. Furthermore, equity allocations peaked for both Traditional and Roth IRA owners ages 45–54. IRAs with the largest and smallest balances had the lowest combined exposure to equities (including the equity share of balanced funds added to the pure equity funds).
Overall in 2016, 28.6 percent of IRAs had less than 10 percent in equities and 26.6 percent had more than 90 percent in equities, so called “extreme allocations” in a particular asset category. Furthermore, more than 1 in 5 IRAs (23.4 percent) had more than 90 percent of their assets in bonds and money.