Individual retirement accounts (IRAs) are a vital component of U.S. retirement savings, holding nearly one- quarter of all retirement plan assets in the nation. A substantial portion of these IRA assets originated in other tax-qualified retirement plans, such as defined benefit (pension) and 401(k) plans, and were moved to IRAs through rollovers from those plans.
As part of the EBRI Center for Research on Retirement Income (EBRI CRI), the EBRI IRA Database is an ongoing project that collects data from IRA-plan administrators across the nation. For year-end 2013, it contained information on 25.8 million accounts owned by 20.6 million unique individuals, with total assets of $2.46 trillion.
The average account balance decreased from $91,864 in 2010 to $87,668 in 2011 before increasing to $119,804 in 2013—an increase of 30.4 percent from 2010 to 2013, and 14.1 percent from 2012 to 2013. The median (mid-point) followed the same pattern, going from $25,296 to $23,785 to $32,179, representing increases of 27.2 percent between 2010 and 2013 and 15.0 percent between 2012 and 2013.
The percentage of individuals who contributed to their IRA was relatively consistent ranging from 12.1 percent in 2010 to 13.8 percent in 2013. The percentage of individuals owning Traditional IRAs who contributed to them rose from 5.2 percent in 2010 to 7.0 percent in 2013. In contrast, the percentage of Roth owners who contributed ranged from 24.0 percent to 26.0 percent from 2010–2013.
The percentage of contributors who contributed the maximum rose from 43.5 percent in 2010 to 53.5 percent in 2012. However, with the increase in the maximum allowable contribution in 2013, the percentage contributing the maximum overall fell to 43.3 percent in 2013. The average contribution increased from $3,335 in 2010 to $4,145 in 2013.
When examining the same individuals who were in the database each year from 2010 to 2013, the median percentage change in these individuals’ account balances was a 33.6 percent increase. Furthermore, at the 25th percentile and the 75th percentile, increases of 2.6 percent and 57.1 percent resulted.
The growth rates for Roth IRA balances were higher both overall and by age and gender. The median Roth IRA increase was 51.6 percent from 2010 to 2013, compared with 28.3 percent for all Traditional IRAs. A major factor in these different rates of growth was that new contributions make up a larger portion of the Roth IRAs than they do for Traditional IRAs, which magnified the impact of contributions. In addition, Roth IRAs are not subject to required minimum distributions for those older than 70-½ years, as are Traditional IRAs.