August 2016 • No.
424
2014 Update of the EBRI IRA Database: IRA Balances, Contributions, Rollovers, Withdrawals, and Asset Allocation By Craig Copeland, Ph.D., Employee Benefit Research Institute A T
A
G L A N C E
This Issue Brief is the sixth annual cross-sectional analysis update 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 2014, the latest data available. The EBRI IRA Database is an ongoing project of the Employee Benefit Research Institute (EBRI) that collects data from IRA-plan administrators across the nation. For year-end 2014, it contains information on 26.7 million accounts owned by 21.1 million unique individuals, with total assets of $2.69 trillion. For accounts in the database, the IRA type, account balance, contributions made, rollovers transferred, and 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 slightly more than $100,000 and the average IRA individual balance was $127,583, but the balances varied significantly by the IRA type: Roth IRAs had the lowest average balance, while Traditional IRAs had the highest average balance. Just less than 12 percent of all accounts in the database received a contribution in 2014, but Roth IRAs were more likely to receive a contribution than Traditional IRAs (25.9 percent vs. 6.4 percent). Rollovers in 2014 amounted to 15 times more than the total contributions in the database, with the average and median rollover to a Traditional IRA in 2014 being $97,174 and $25,827, respectively. Almost 24 percent of individuals owning a Traditional or Roth IRA took a withdrawal in 2014, including 27.2 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.
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One-quarter of owners ages 71 or older was found to have withdrawn an amount from their Traditional IRA in excess of their RMD. More than 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 older or owning a Traditional IRA had, on average, lower allocations to equities. Individuals with the largest balances had the lowest combined exposure to equities (including the equity share of balanced funds added to the pure equity funds). Overall, 27.0 percent of IRAs had less than 10 percent in equities and 27.9 percent had more than 90 percent in equities, so called “extreme allocations” in a particular asset category. Furthermore, just short of 1 in 5 IRAs (17.2 percent) had more than 90 percent of their assets in bonds and money funds.
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Craig Copeland is senior research associate at the Employee Benefit Research Institute (EBRI). This Issue Brief was written with assistance from the Institute’s research and editorial staffs. Any views expressed in this report are those of the author and should not be ascribed to the officers, trustees, or other sponsors of EBRI, Employee Benefit Research Institute-Education and Research Fund (EBRI-ERF), or their staffs. Neither EBRI nor EBRI-ERF lobbies or takes positions on specific policy proposals. EBRI invites comment on this research.
Copyright Information: This report is copyrighted by the Employee Benefit Research Institute (EBRI). It may be used without permission, but citation of the source is required.
Recommended Citation: Craig Copeland, “2014 Update of the EBRI IRA Database: IRA Balances, Contributions, Rollovers, Withdrawals, and Asset Allocation,” EBRI Issue Brief, no. 424 (Employee Benefit Research Institute, August 2016).
Report availability: This report is available on the Internet at www.ebri.org
Data Security The Employee Benefit Research Institute’s (EBRI’s) retirement databases (the EBRI/ICI Participant-Directed Retirement Plan Database, the EBRI IRA Database, and the EBRI Integrated Defined Contribution/IRA Database) have undergone multiple independent security audits and have been certified to be fully compliant with the International Organization for Standardization (ISO) and the International Electrotechnical Commission (IEC) ISO/IEC 27002 Information Security Audit standard. Moreover, EBRI has obtained a legal opinion that the methodology used meets the privacy standards of the Gramm-Leach-Bliley Act. At no time has any nonpublic, personal information that is personally identifiable, such as Social Security number, been transferred to or shared with EBRI
Table of Contents Introduction .......................................................................................................................................................... 6 Data ..................................................................................................................................................................... 6 IRA Types ............................................................................................................................................................. 7 Average IRA Balances ............................................................................................................................................ 8 Contributions ...................................................................................................................................................... 14 Rollovers............................................................................................................................................................. 16 Withdrawals ........................................................................................................................................................ 23 Asset Allocation ................................................................................................................................................... 27 Allocations Within IRA Types ............................................................................................................................ 29 Allocations by Gender ...................................................................................................................................... 30 Allocations by Age ........................................................................................................................................... 32 “Extreme” Allocations ....................................................................................................................................... 33 Discussion ........................................................................................................................................................... 37 Conclusion .......................................................................................................................................................... 38 About IRAs ......................................................................................................................................................... 39 Endnotes ............................................................................................................................................................ 40
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Figures Figure 1, Distribution of IRA Types by Accounts and Individuals, 2014 ...................................................................... 7 Figure 2, Distribution of IRA Ownership, by Various Demographic Characteristics and IRA Type, 2014 ......................... 9 Figure 3, Average IRA Balance for All Accounts and Individuals, by IRA Type, 2014 ................................................. 10 Figure 4, Median IRA Balance for All Accounts and Individuals, by IRA Type, 2014 ................................................... 10 Figure 5, Average IRA Balance for All Accounts and Individuals, by Age of Account Owner, 2014 .............................. 11 Figure 6, Median IRA Balance for All Accounts and Individuals, by Age of Account Owner, 2014 ................................ 11 Figure 7, Average and Median Individual IRA Balance, by IRA Type and Age, 2014 .................................................. 12 Figure 8, Average and Median IRA Balance for All Accounts and Individuals, by Gender of Account Owner, 2014 ....... 13 Figure 9, Average and Median Individual IRA Balance, by Gender and Age of Account Owner, 2014 .......................... 13 Figure 10, Average and Median Individual IRA Balance, by IRA Type and Gender of Account Owner, 2014 ................ 14 Figure 11, Percentage of Those Owning a Traditional or Roth IRA Who Contributed to It and the Percentage of Those Contributing Who Contributed the Maximum Allowable Amount, by All Accounts and Individuals, 2014 ......... 15 Figure 12, Percentage of Traditional or Roth IRA Accounts That Received a Contribution, by Age of Account Owner, 2014 ...................................................................................................................................................... 15 Figure 13, Percentage of Traditional or Roth IRA Accounts That Received a Contribution that Received the Maximum Allowable Contribution, by Age of Account Owner, 2014 ............................................................................ 17 Figure 14, Percentage of Traditional or Roth IRA Accounts That Received a Contribution, by Gender of Account Owner, 2014 ...................................................................................................................................................... 17 Figure 15, Percentage of Traditional or Roth IRA Accounts That Received a Contribution That Received the Maximum Contribution, by Gender of Account Owner, 2014 ...................................................................................... 18 Figure 16, Distribution of the IRAs Receiving Contributions, by IRA Type and Age and Gender of Account Owner, 2014 ...................................................................................................................................................... 19 Figure 17, Distribution of Traditional and Roth IRAs Receiving Contributions, by Age and Gender of Account Owner, 2014 ...................................................................................................................................................... 19 Figure 18, Distribution of Contribution and Rollover Amounts to Traditional and Roth IRAs, 2014 .............................. 20 Figure 19, Distribution of Traditional and Roth IRAs That Received a Rollover, by Age and Gender of Account Owner, 2014 ...................................................................................................................................................... 20 Figure 20, Distribution of Those Rolling Over to a Traditional IRA, by Age and Gender of Account Owner, 2014 ......... 21 Figure 21, Distribution of Rollovers by Amounts to Traditional IRAs, by Number and Value of the Rollovers, 2014 ...... 22 Figure 22, Distribution of Rollovers by Amounts to Roth IRAs, by Number and Value of the Rollovers, 2014 ............... 22 Figure 23, Distribution of the Individuals With Withdrawals from Traditional and Roth IRAs, by Various Characteristics, 2014 ...................................................................................................................................................... 23
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Figure 24, Percentage of Individuals Owning IRAs With a Withdrawal, by Various Characteristics, 2014 ..................... 24 Figure 25, Average Individual Withdrawal Amounts from Individual Retirement Accounts, by Various Characteristics, 2014 ...................................................................................................................................................... 25 Figure 26, Distribution of Withdrawal Amounts for Those Taking a Withdrawal from IRAs, by Various Characteristics, 2014 ...................................................................................................................................................... 26 Figure 27, Distribution of Withdrawal Rates for Those Taking a Withdrawal from IRAs, by Various Characteristics, 2014 ...................................................................................................................................................... 26 Figure 28, Percentage of Individuals Age 71 or Older Withdrawing an Amount Greater Than the Required Minimum Distribution From Their Traditional IRA, by Account Balance, 2014 ............................................................. 28 Figure 29, IRA Asset Allocation, by Various Characteristics, 2014 ............................................................................ 29 Figure 30, IRA Asset Allocation, by IRA Type, 2014 ................................................................................................ 30 Figure 31, IRA Asset Allocation, by IRA Type and Gender of Account Owner, 2014 ................................................... 31 Figure 32, IRA Asset Allocation, by IRA Type and Age of Account Owner, 2014 ........................................................ 31 Figure 33, IRA Asset Allocation, by IRA Type and Account Balance, 2014 ................................................................ 32 Figure 34, IRA Asset Allocation, by Gender and Age of Account Owner, 2014 ........................................................... 33 Figure 35, IRA Asset Allocation, by Gender of Account Owner and Account Balance, 2014 ........................................ 34 Figure 36, IRA Asset Allocation, by Age of Account Owner and Account Balance, 2014 ............................................. 35 Figure 37, Percentage of IRAs With Extreme Asset Allocations, by Various Characteristics, 2014 ............................... 37 Figure A, Sources of Estimated Total U.S. Retirement Plan Assets, 2014 .................................................................. 40 Figure B, Distribution of IRAs, by Asset Allocation Data and Various Characteristics, 2014 ........................................ 43
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2014 Update of the EBRI IRA Database: IRA Balances, Contributions, Rollovers, Withdrawals, and Asset Allocation By Craig Copeland, Ph.D., Employee Benefit Research Institute Introduction Individual retirement accounts (IRAs) are a vital component of U.S. retirement savings, holding over one quarter of all retirement plan assets in the nation.1 A substantial and growing portion of these IRA assets originate in other taxqualified retirement plans, such as defined benefit (pension) and 401(k) plans, and are moved to IRAs through rollovers from those plans. The Employee Benefit Research Institute (EBRI) has focused on retirement savings since its inception in 1978 and has been particularly detailed in the study of participants in 401(k) plans and, more recently, of IRA account holders as well through the creation of, and updates to, the EBRI IRA Database. This study is the sixth annual, cross-sectional analysis update of the EBRI IRA Database on the distribution of IRA types, average and median account balances, and contributions and rollovers to IRAs for 2014, the latest data available.2 Furthermore, this update includes the percentage of Traditional and Roth IRA owners in the EBRI IRA Database that had a withdrawal in 2014, along with the amount and the proportion of the account the withdrawal represented, by IRA type and account balance and by the gender and age of the account owner.3 Finally, the most recent asset allocation of IRAs found in the EBRI IRA Database is examined.4 The asset allocation is presented on a dollar-weighted basis within IRAs by type and account balance, as well as by gender and age of the account owner. In addition to presenting the average asset allocation across the accounts, this study includes a discussion of the percentage of accounts with “extreme” allocations—either less than 10 percent or more than 90 percent in a selected asset category. This illustrates the distribution of the allocations to the various assets across all IRAs. An additional study with a longitudinal analysis of each of these topics is forthcoming. Other future studies from EBRI will utilize the database’s ability to link the account(s) of individuals within and across participating data providers in the IRA database with account(s) of those same individuals who participate in defined contribution (DC) plans. This is done both within a calendar year and longitudinally; permitting the examination of retirement asset holdings as individuals age and either change jobs or retire.
Data The EBRI IRA Database is an ongoing project that collects data from IRA-plan administrators across the nation. For year-end 2014, it contains information on 26.7 million accounts owned by 21.1 million unique individuals, with total assets of $2.69 trillion.5 The database contains information on 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. Based on the richness of the data, the study presents account-level and individual-level results for certain IRA features. Furthermore, the database allows for the linking of IRAs of individuals within a data provider as well as across data providers. This allows for a better understanding of the total IRA balances that individuals have than when they can’t be linked, since a sizable number of individuals have more than one IRA.
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IRA Types In the EBRI IRA Database, IRAs have been classified into five types: 1. Traditional–originating from contributions (TOFC). 2. Roth. 3. Simplified Employee Pension (SEP)/Savings Incentive Match Plan for Employees (SIMPLE). 4. Traditional–originating from assets rolled over from other tax-qualified plans (TOFR), such as an employmentbased pension or a 401(k) plan (although not all the assets in these accounts are exclusively from employmentbased sources, so this should not be used as a proxy for the amount of employment-based dollars in IRAs).6 5. (5) Unknown.7 The distribution of all IRA accounts in this database as of year-end 2014 was: 34.0 percent TOFC IRAs. 30.1 percent TOFR IRAs (combined Traditional IRAs, 64.1 percent). 23.3 percent Roth IRAs. 6.6 percent SEPs and SIMPLEs 6.0 percent unknown (Figure 1).8
Figure 1 Distribution of IRA Types by Accounts and Individuals, 2014 80% Accounts
73.7%
Individuals
70% 64.1% 60%
50% 40.7%
40%
35.8%
34.0% 28.9%
30%
30.1%
23.3% 20%
8.2%
10%
6.0% 5.7%
6.6%
0% Traditional-Originating from Contributions*
Roth
Traditional-Originating from Rollovers*
SEP/SIMPLE
All Traditional
Unknown
Source: EBRI IRA Database. * Both of these accounts could have received contributions or rollovers after their origination, so these are not proxies for employment-based dollars versus IRA-only dollars. The Traditional-originating from rollovers percentages do provide an estimate of the dollars that have been moved into a new IRA. Note: The percentages for individuals add up to more than 100 percent, as an individual may own more than one type of IRA.
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On a unique individual basis (combining the accounts owned by the same person into one observation), the distribution was: 40.7 percent TOFC IRAs. 35.8 percent TOFR IRAs (combined Traditional IRAs, 73.7 percent). 28.9 percent Roth IRAs. 8.2 percent SEPs or SIMPLEs. 5.7 percent unknown.9 Among all IRA owners in the database, nearly one-half (46.3 percent) were ages 45–64 (Figure 2). However, the age distribution was very different for those owning a TOFC IRA relative to other IRA types. Of those owning a TOFC IRA, 15.4 percent were under age 45, compared with 38.8 percent of those with a Roth, 24.9 percent of those with a TOFR IRA, and 28.0 percent of those with a SEP or SIMPLE IRA. IRA owners were more likely to be male. In particular, those having a TOFR IRA or a SEP/SIMPLE IRA were much more likely to be male (57.0 percent of TOFR-IRA owners and 58.0 percent of SEP/SIMPLE owners were male, recalculated from Figure 2 for those in the database with a known gender). Just under 45 percent (44.8 percent) of those owning IRAs had less than $25,000 in their accounts at year-end 2014 (Figure 2).10 Roth-IRA and SEP/SIMPLE-IRA owners were more likely to have these lower balances at 42.7 percent and 43.0 percent, respectively, while 34.3 percent of TOFC-IRA owners were in that category (Figure 2).11 TOFR-IRA owners had the largest percentage of account balances of $100,000 or more at 37.9 percent, while TOFC-IRA and SEP/SIMPLE-IRA owners had the next-highest percentages (35.0 percent and 34.0 percent, respectively). For all IRAs combined, 28.3 percent of individual owners had balances of $100,000 or more.12
Average IRA Balances The average IRA account balance in 2014 was $100,643, while the average IRA individual balance (all accounts from the same person combined) was $127,583 (Figure 3). TOFR IRAs had the highest average individual balance at $157,277, while Roth IRAs had the lowest at $39,544.13 The median (midpoint, half above and half below) account IRA balance was $26,302, while the median individual IRA balance was $33,185 (Figure 4). The median TOFR IRA balance was higher than the balances of the other plan types. The overall average and median individual balances were 27 percent and 26 percent, respectively, higher than the overall average and median account balances. The average individual balances exceeded the average account balances by smaller percentages for each of the plan types, ranging from 3 percent for the SEP/SIMPLE average balances to 7 percent for TOFR IRAs. This suggests that individuals with more than one IRA typically had more than one type of IRA—and that not taking into account all IRA holdings would miss approximately one-quarter of the average individual’s cumulative IRA assets. The average individual IRA balance increased with age for owners ages 25 or older (Figure 5). This average balance increased from $12,552 for those ages 25–29 to $232,389 for those ages 70 or older. The median individual balance also increased with the owner’s age. In particular, the median individual balance increased from $3,433 for those under age 25 to $80,500 for those ages 70 or older (Figure 6). Across each plan type, the average and median individual IRA balances increased with the owner’s age at least above age 25 (Figure 7). However, for TOFC IRAs, the average account balance declined for owners ages 70 or older, while the median account balance declined for all Traditional IRAs for owners ages 70 or older. For owners ages 40 and older, the average and median account balances for TOFR IRAs were higher than for each of the other plan types.14
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Ind. 1.6% 3.6 5.8 6.8 8.3 9.8 11.8 12.6 12.1 10.4 16.0 1.3 25.5 30.4 44.1 21.8 8.5 14.5 13.1 13.8 7.3 7.7 13.3
25.0 30.7 44.3 22.9 10.0 16.1 13.8 13.6 6.8 6.7 10.1
All Acct. 1.2% 3.1 5.2 6.4 8.1 9.7 11.8 13.0 12.8 11.6 15.9 1.3
15.8 8.7 15.8 15.1 16.0 8.6 8.5 11.5
24.3 26.2 49.5 13.3 7.0 14.0 14.4 16.4 9.1 9.6 16.2
24.5 26.2 49.3
Traditional-Conts.* Acct. Ind. 0.5% 0.6% 1.5 1.6 2.8 3.0 4.0 4.2 5.7 6.0 7.9 8.1 11.0 11.3 13.9 13.9 14.6 14.3 13.9 12.8 22.2 22.0 2.2 2.2
22.1 16.2 23.8 17.3 13.1 3.9 2.0 1.6
26.3 31.3 42.3
Acct. 3.2% 6.1 8.8 9.6 10.5 10.9 11.4 11.3 10.2 8.5 8.8 0.7
Roth
15.3 10.5 17.0 14.6 14.9 7.4 7.5 12.9
26.2 31.0 42.8
Ind. 3.3% 6.2 9.0 9.7 10.6 10.8 11.4 11.2 10.1 8.2 8.7 0.8
25.4 5.5 10.9 11.1 13.1 8.1 9.3 16.6
29.1 39.5 31.4
23.1 5.0 10.1 10.7 13.2 8.3 9.9 19.8
29.4 39.0 31.6
Traditional-Rlvr* Acct. Ind. 0.4% 0.4% 2.5 2.7 5.1 5.3 6.9 7.1 9.1 9.4 10.8 11.1 12.9 13.0 13.1 13.0 12.6 12.3 11.3 10.9 14.7 14.4 0.7 0.3
28.1 9.6 16.0 12.8 12.2 6.3 6.7 8.4
27.0 37.6 35.4
23.5 7.3 12.2 10.9 12.1 7.4 9.1 17.6
26.9 37.1 36.1
SEP/SIMPLE Acct. Ind. 0.8% 0.9% 3.3 3.4 5.8 6.0 7.7 7.8 10.0 10.1 12.4 12.4 15.2 15.2 15.5 15.4 12.9 12.8 9.0 8.9 7.3 7.3 0.1 0.1
20.3 7.2 13.5 13.3 14.7 8.4 8.9 13.9
26.6 32.4 41.0
18.5 6.3 12.5 12.9 15.0 8.7 9.5 16.8
26.8 31.9 41.4
All Traditional Acct. Ind. 0.5% 0.5% 2.0 2.1 3.9 4.2 5.3 5.7 7.3 7.7 9.3 9.5 11.9 12.1 13.5 13.4 13.7 13.2 12.7 11.8 18.7 18.5 1.5 1.4
48.4 17.0 13.4 7.0 4.9 2.3 2.3 4.9
1.3 1.5 97.2
41.2 12.3 14.8 9.6 7.5 3.4 3.4 7.9
2.9 3.2 93.9
Unknown Acct. Ind. 2.4% 3.4% 2.9 4.0 4.1 4.9 4.3 4.9 4.9 5.7 6.5 7.1 8.9 9.7 12.0 12.0 13.2 12.1 14.6 11.0 23.6 23.0 2.8 2.3
Source: EBRI IRA Database. Acct.=Accounts; Ind.=Individuals * Traditional–Conts.=Traditional–Originating from Contributions and Traditional–Rlvr=Traditional–Originating Rollovers. Both of these accounts could have received contributions or rollovers after their origination, so these arenot proxies for employment-based dollars versus IRA-only dollars. The Traditional-originating from rollover percentages do provide an estimate of the dollars that have been moved into a new IRA.
Age of Owner Under 25 25–29 30–34 35–39 40–44 45–49 50–54 55–59 60–64 65–69 70 or older Unknown Gender of Owner Female Male Unknown Account Balance Less than $5,000 $5,000–$9,999 $10,000–$24,999 $25,000–$49,999 $50,000–$99,999 $100,000–$149,999 $150,000–$249,999 $250,000 or more
Figure 2 Distribution of IRA Ownership, by Various Demographic Characteristics and IRA Type, 2014 (All accounts versus individuals)
Figure 3 Average IRA Balance for All Accounts and Individuals, by IRA Type, 2014 $180,000 Accounts
Individuals $157,277
$160,000 $147,527
$142,780
$140,000 $129,385
$127,583 $120,163
$120,000
$113,346 $100,643
$100,000 $81,975
$84,599
$80,000
$70,508
$60,000
$53,246 $38,767 $39,544
$40,000
$20,000
$0
IRA Type Source: EBRI IRA Database. * Both of these accounts could have received contributions or rollovers after their origination, so these are not proxies for employment-based dollars versus IRA-only dollars. The Traditional-originating from rollovers do provide an estimate of the dollars that have been moved into a new IRA.
Figure 4 Median IRA Balance for All Accounts and Individuals, by IRA Type, 2014 $50,000 Accounts
Individuals
$45,000
$43,598 $42,180
$40,000 $35,000
$42,157 $40,449
$39,343 $39,389
$33,185
$30,000 $26,302
$25,000 $20,526
$20,604
$20,000 $15,620 $15,847
$15,000 $10,000 $5,130
$6,241
$5,000 $0
IRA Type Source: EBRI IRA Database. * Both of these accounts could have received contributions or rollovers after their origination, so these are not proxies for employment-based dollars versus IRA -only dollars. The traditional-originating from rollovers do provide an estimate of the dollars that have been moved into a new IRA.
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Figure 5 Average IRA Balance for All Accounts and Individuals, by Age of Account Owner, 2014 Accounts
$224,144
$250,000
$232,389
$275,000 Individuals
$177,699 $132,735
$98,935
$75,389
$57,053
$52,582
$34,903
$28,918
$21,120
$12,552
$11,446
$13,264
$25,000
$12,761
$50,000
$18,324
$75,000
$42,289
$100,000
$72,177
$125,000
$96,726
$150,000
$129,659
$130,459
$175,000
$184,653
$200,000
$163,747
$175,418
$225,000
$0 Under 25
25–29
30–34
35–39
40–44
45–49
50–54
55–59
60–64
65–69
70 or Older Unknown
Owner Age Source: EBRI IRA Database.
$32,959
$31,453
$24,811
$24,564
$17,864
$14,558
$12,138
$7,531
$6,864
$4,826
$4,664
$3,433
$10,000
$3,428
$20,000
$10,714
$30,000
$19,149
$40,000
$32,639
$50,000
$41,500
$42,950
$60,000
$44,692
$59,138
$70,000
$62,943
Individuals
$54,456
Accounts
$80,000
$79,928
$90,000
$80,500
Figure 6 Median IRA Balance for All Accounts and Individuals, by Age of Account Owner, 2014
$0 Under 25
25–29
30–34
35–39
40–44
45–49
50–54
55–59
60–64
65–69
70 or Older Unknown
Owner Age Source: EBRI IRA Database.
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9,767 14,257 20,553 25,214 28,389 32,043 36,526 42,433 49,695 62,432 94,687 37,208
4,970 4,000 5,979 10,542 15,779 22,229 29,993 40,154 53,315 70,043 70,402 46,927
39,988 14,392 19,408 31,107 46,401 62,042 80,518 106,866 142,469 181,352 180,514 121,044
Roth
5,036 7,941 11,680 13,779 14,657 15,585 16,781 18,759 21,946 25,555 29,917 16,893
Median $15,847 5,879 7,755 18,386 36,305 58,062 82,038 114,248 159,582 217,070 273,251 312,544 498,850
1,676 2,673 4,590 10,592 19,555 29,704 42,666 58,671 84,334 112,778 126,975 120,084
Traditional-Rlvr* Average Median $157,277 $43,598 6,047 8,216 16,173 28,720 45,590 62,918 81,177 104,210 126,434 146,329 151,894 97,682
1,568 3,099 5,293 8,493 13,051 18,416 25,027 32,129 40,230 47,319 51,853 28,774
SEP/SIMPLE Average Median $84,599 $20,604 26,466 10,473 18,970 34,837 54,599 75,591 101,742 137,035 183,242 231,306 237,420 167,652
2,649 3,086 5,262 10,617 18,074 26,432 36,437 48,540 66,256 88,672 88,541 50,176
All Traditional Average Median $142,780 $42,157
4,179 3,409 5,555 9,476 15,926 23,612 32,402 48,082 75,619 112,480 123,379 358,820
557 1,161 1,813 2,251 2,912 3,545 4,569 6,225 8,925 14,009 18,552 40,265
Unknown Average Median $70,508 $6,241
Source: EBRI IRA Database. * Traditional-Conts.=Traditional-Originating from Contributions and Traditional-Rlvr=Traditional-Originating Rollovers. Both of these accounts could have received contributions or rollovers after their origination, so these are not proxies for employment-based dollars versus IRA-only dollars. The Traditional-originating from rollovers do provide an estimate of the dollars that have been moved into a new IRA.
All Age of Owner Under 25 25–29 30–34 35–39 40–44 45–49 50–54 55–59 60–64 65–69 70 or older Unknown
Average $39,544
Traditional-Conts.* Average Median $120,163 $39,389
Figure 7 Average and Median Individual IRA Balance, by IRA Type and Age, 2014
Males had higher individual average and median balances than females: $153,649 and $41,057, respectively, for males, vs., $94,774 and $29,651 for females (Figure 8). Across all ages 25 or older, males had both higher individual average and median balances than females (Figure 9). The median balance for males reached $112,539 for those ages 70 or older, compared with $65,185 for females of that age.
Figure 8 Average and Median IRA Balance for All Accounts and Individuals, by Gender of Account Owner, 2014 $180,000
$160,000
$153,649 Female Male
$140,000 $128,631
Unknown
$121,623 $120,000 $99,457
$100,000
$80,000
$94,774
$77,044
$60,000 $41,057 $40,000
$32,913 $24,617
$29,651
$30,923
$23,435
$20,000
$0 Accounts
Individuals
Accounts
Individuals
Average
Median
Source: EBRI IRA Database.
Figure 9 Average and Median Individual IRA Balance, by Gender and Age of Account Owner, 2014 Female Average Median All $94,774 $29,651 Age of Account Ow ner Under 25 12,636 4,053 25-29 11,938 4,425 30-34 19,642 7,227 35-39 31,552 11,938 40-44 45,434 16,968 45-49 60,289 22,570 50-54 79,823 29,357 55-59 103,675 37,406 60-64 132,581 49,431 65-69 159,686 63,823 70 or older 160,217 65,185 Unknow n 70,184 15,128
Average $153,649
Male Median $41,057
Unknow n Average Median $128,631 $30,923
11,746 13,772 23,801 39,167 59,673 83,168 113,215 155,584 213,368 275,453 295,170 246,699
4,013 5,001 8,298 13,271 19,977 28,415 39,696 53,713 76,490 104,938 112,539 16,422
14,017 12,088 20,103 33,852 51,815 71,534 95,222 128,752 173,803 225,155 230,143 177,668
3,105 4,953 7,256 11,642 17,044 23,339 30,417 40,165 55,715 76,434 73,610 45,218
So urce: EB RI IRA Database.
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Males had larger average and median balances across each of the plan types as well, with the largest differences being among those with a TOFR IRA, at $178,439 average and $52,994 median for males vs. $101,221 average and $29,277 median for females (Figure 10). For Roth IRAs, average and median individual balances were much closer: $46,449 and $18,366 for males vs. $36,161 and $17,125, respectively, for females.
$150,518
SEP/SIMPLE
Traditional-Conts.* $125,358
$6,025
$46,294 $18,165
$13,617
$42,626 $51,659
$52,994 $18,489
$40,503
$18,366
$32,921
$29,277 $12,000
$31,941
$19,084
$27,863 $48,077
Unknown
$17,125
$36,608
Traditional-Rlvr*
$70,952
$75,541
$46,449
$50,409
Roth
All Traditional
$85,786
$101,275
$101,221
$101,640 $59,990
$36,161
$100,000
$94,139
$150,000
$50,000
$178,439 $134,748
$167,319
$200,000
$183,406
Figure 10 Average and Median Individual IRA Balance, by IRA Type and Gender of Account Owner, 2014
$0 Female
Male Average
Unknown
Female
Male
Unknown
Median
Source: EBRI IRA Database. * Traditional-Conts.=Traditional--Originating from Contributions and Traditional-Rlvr=Traditional--Originating from Rollovers. Both of these accounts could have received contributions or rollovers after their origination, so these are not proxies for employment-based dollars versus IRA-only dollars. The Traditional-originating from rollovers do provide an estimate of the dollars that have been moved into a new IRA.
Contributions15 Focusing only on Roth and Traditional IRAs, 11.6 percent of the accounts received contributions, and 14.2 percent of the individuals owning these IRA types contributed to them in 2014 (Figure 11). Among Traditional-IRA owners, 7.1 percent contributed, while 26.4 percent of those owning a Roth IRA contributed.16 Of those individuals contributing to an IRA in 2014, 55.4 percent contributed the maximum amount.17 Two-thirds (66.5 percent) of those contributing to a Traditional IRA contributed the maximum, while 44.9 percent did so with a Roth IRA.18, 19
Age: When looking at the age of the owners of the IRAs, younger Roth IRA owners were more likely to contribute to their Roth IRA than were older Roth IRA owners (Figure 12): 49 percent of Roth accounts owned by those ages 25–29 received a contribution in 2014, compared with 24 percent of Roth IRAs owned by those ages 55–59. However, the percentage of Traditional IRA accounts being contributed to did not dramatically decline as the owner’s age increased, as the percentage receiving a contribution ranged from 14 percent to 8 percent for account owners up through age 59. In contrast, older account owners, in general, were more likely to have made the maximum contribution to both Roth and Traditional IRAs (Figure 13). For Roth accounts receiving a contribution, the percentage receiving the maximum contribution was highest for accounts owned by those over age 49. Specifically, for Roth accounts owned by individuals ages 25–29, 42 percent received the maximum contribution, compared with 45 percent for Roth accounts owned by ebri.org Issue Brief • August 2016 • No. 424
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Figure 11 Percentage of Those Owning a Traditional* or Roth IRA Who Contributed to It and the Percentage of Those Contributing Who Contributed the Maximum Allowable Amount, by All Accounts and Individuals, 2014 70%
66.5% All
Traditional*
Roth
60% 55.4% 53.3% 48.2%
50%
44.9%
44.6% 40%
30%
26.4%
25.9%
20% 14.2% 11.6% 10%
7.1%
6.4%
0% Accounts
Individuals
Accounts
Contributing
Individuals
Of Those Contributing Who Contributed the Maximum
Source: EBRI IRA Database. * Traditional IRAs in this figure include all Traditional IRAs.
Figure 12 Percentage of Traditional* or Roth IRA Accounts That Received a Contribution, by Age of Account Owner, 2014 60% 55%
All
Roth
Traditional*
49%
50%
43%
40%
38%
31% 29%
30%
25%
24%
23%
22%
24% 22%
21%
20% 17% 15%
14%
14% 10%
10%
9%
9%
13% 8%
12% 8%
12% 8%
10% 8%
8%
7% 7%
6%
5% 2%
1%
3%
0% Under 25
25–29
30–34
35–39
40–44
45–49
50–54
55–59
60–64
65–69
70 or Older
Unknown
Source: EBRI IRA Database. * Traditional IRAs in this figure include all Traditional IRAs.
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individuals ages 50–54, the lowest percentage for Roth accounts owned by individuals ages 50 or older. The percentage of Traditional IRAs receiving the maximum contribution jumped for owners ages 35 or older. The percentage of Traditional IRAs receiving the maximum was no lower than 48 percent for owners ages 35 or older compared with at most 41 percent for those accounts owned by individuals younger than age 35.
Gender: The likelihood of contributing to an IRA did not significantly differ by gender within the database, as both Roth and Traditional IRAs owned by either males or females had similar probabilities of receiving contributions.20 For example, 5.3 percent of Traditional IRAs owned by females received contributions in 2014, as did 5.0 percent of accounts owned by males (Figure 14).21 Combining both types of IRAs, the percentage of accounts receiving a contribution was 10.0 percent for females and 10.1 percent for males. Furthermore, the percentage of accounts receiving a contribution that received the maximum contribution was also very similar between the genders: 45.5 percent for females and 46.5 percent for males (Figure 15). In 2014 over 2.7 million IRA accounts in the database received contributions (Figure 16), and the average amount contributed was $4,195. More than one quarter (25.2 percent) of the accounts receiving contributions were owned by individuals in their 50s. Additionally, more accounts owned by males received contributions than those owned by females, since there are more male account owners (this is different from the likelihood of contributing as described above). The average contribution was highest for accounts owned by those ages 65–69. In fact, there was a steady increase in the average contribution up through that age, with a noticeable jump when the owners reached age 50, where the maximum allowable contribution is higher under the catch-up contribution rules.22 Accounts owned by males received slightly higher average contributions ($4,111) than did those owned by females ($4,069). More contributions were made to Roth accounts than to all Traditional accounts (both types of Traditional accounts combined into one category) (Figure 16). However, the average contribution to a Traditional account was higher ($4,429) than to a Roth account ($4,035). Yet, a higher overall aggregate amount was contributed to Roth IRAs ($6.48 billion) than to Traditional accounts ($4.86 billion) due to the fact that there were substantially more Roth owners making any level of contribution. Roth IRAs had a higher percentage of younger individuals contribute to them: 24.7 percent of the Roth accounts receiving contributions were owned by individuals ages 25–34, compared with only 8.6 percent of Traditional accounts owned by those ages 25–34. Furthermore, both Roth and Traditional accounts receiving contributions were more frequently owned by males, and the average contribution was higher for male account owners to both of the IRA types, albeit by a very small amount. Even when accounting for age, the average contributions to accounts owned by males were larger than those to accounts owned by females (Figure 17), although at some ages the average contributions were nearly equal. Yet, the age distributions for the male- and female-owned accounts that received contributions were very similar. For example, 25.6 percent of the female-owned accounts that received a contribution were owned by those ages 45–54, compared with 23.9 percent of the accounts that received a contribution that were owned by males were in that age range.
Rollovers23 When comparing the source of IRA funds, contributions vs. rollovers, rollovers overwhelmingly outweighed new contributions in dollar terms. While over 2.7 million accounts in the database received contributions compared with the almost 1.9 million accounts that received rollovers in 2014, the amount of dollars moved to IRAs through rollovers was nearly 15 times the amount contributed directly to IRAs (Figure 18). This is not surprising, given the annual contribution limit of $5,500 ($6,500 for those ages 50 or older) to IRAs in 2014, relative to the theoretically unlimited amount that could be added via a rollover. Almost 30 percent of contributions made to IRAs were in the $5,501 to $6,500 range (the maximum amount allowed) compared with 72.0 percent of the rollovers being $5,000 or larger including 9.5 percent of $250,000 or more.
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Figure 13 Percentage of Traditional* or Roth IRA Accounts That Received a Contribution that Received the Maximum Allowable Contribution, by Age of Account Owner, 2014 80% Roth
Traditional*
69%
All
31% 31% 31%
48%
52%
65% 61%
61% 63% 60%
59% 60% 58%
54% 48%
52%
32%
45%
35–39
42%
41% 39%
30–34
40%
44%
40% 40% 41%
41% 42%
50%
39%
48%
60%
55% 53% 56%
70%
30%
20%
10%
0% Under 25
25–29
40–44
45–49
50–54
55–59
60–64
65–69
70 or Older
Source: EBRI IRA Database. *Traditional IRAs in this figure include all Traditional IRAs.
Figure 14 Percentage of Traditional* or Roth IRA Accounts That Received a Contribution, by Gender of Account Owner, 2014 35% Female
Male
Unknown
30%
28.7%
24.5%
25%
23.1%
20%
15%
13.8%
10.0%
10.1%
10%
8.2% 5.3%
5.0%
5%
0% All
Traditional*
Roth
Source: EBRI IRA Database. *Traditional IRAs in this figure include all Traditional IRAs.
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Figure 15 Percentage of Traditional* or Roth IRA Accounts That Received a Contribution That Received the Maximum Contribution, by Gender of Account Owner, 2014 70% Female
Male
Unknown
60% 55.9% 50.3% 50% 45.5%
49.9%
51.1%
46.5%
46.1% 42.7%
43.9%
40%
30%
20%
10%
0% All
Traditional*
Roth
Source: EBRI IRA Database. *Traditional IRAs in this figure include all Traditional IRAs.
The average and median rollover amounts to Traditional IRAs were $97,174 and $25,827, respectively, and to Roth IRAs were $21,789 and $6,819 (Figure 19). In addition, 1.71 million rollovers to Traditional IRAs occurred in 2014 compared with 0.17 million rollovers to Roth IRAs. Average and median rollover amounts increased with the owner’s age through age 69 for Traditional IRAs and ages 70 or older for Roth IRAs, respectively. Furthermore, the average and median rollover amounts from male-owned accounts were higher than those from female-owned accounts, e.g., for Traditional IRAs, $112,187 and $29,523, respectively, for males, compared with $72,117 and $18,178 for females (Figure 19). Controlling for age, the average and median rollover amounts to Traditional IRAs were still higher among male account owners than among female account owners, except for the average rollover for accounts owned by females under age 25 (Figure 20). The age distribution of those making a rollover was very similar between males and females. For Traditional IRAs, the distribution of rollover dollars was dramatically different from the distribution of the number of rollovers. Just over 13 percent of the rollovers in the database in 2014 were less than $2,000, but the value of those rollovers represented only 0.1 percent of the assets rolled over to Traditional IRAs in the database in 2014 (Figure 21). In contrast, 10.4 percent of the rollovers were $250,000 or more, but the value of those rollovers represented 59.1 percent of the assets rolled to Traditional IRAs. However, for rollovers to Roth IRAs, the distribution of the values of the rollovers was not as skewed to the largest rollover amounts (Figure 22). For example, 20.7 percent of the rollovers to Roth IRAs were in the amount of $10,000–$24,999, but these represented 15.1 percent of the value of the dollars rolled over to IRAs. The value of the largest rollovers to Roth IRAs was 15.7 percent of the dollars rolled over.
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100% 4.4 8.1 10.0 9.4 9.7 10.5 12.2 13.0 11.4 7.3 3.3 0.6 22.8 27.9 49.2
120 220 271 253 263 283 330 352 308 197 89 17
617 755 1,331
23% 0.7 1.6 2.3 2.3 2.5 2.7 3.1 3.3 2.6 1.4 0.4 0.0
19 42 61 61 67 73 85 88 72 39 11 0
3,015 3,344 3,380 3,445 3,577 3,739 4,434 4,708 4,894 4,929 4,826 3,159
$4,257
Female Percent Average
Number (in thousands) 617
Source: EBRI IRA Database. * Traditional IRAs in this figure include all Traditional IRAs.
All Age Under 25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70 or older Unknown
2,513 3,105 5,722
365 763 947 902 970 1,096 1,515 1,705 1,548 1,008 451 68
Total (in millions) $11,340
240 280 578
11 34 61 79 102 127 162 184 169 118 43 8
Number (in thousands) 1,097
21.8 25.5 52.7
1.0 3.1 5.5 7.2 9.3 11.6 14.8 16.7 15.4 10.7 4.0 0.7
100%
4,257 4,318 4,554
2,875 2,942 3,327 3,684 3,895 4,039 4,702 4,843 4,949 5,002 4,985 4,090
$4,429
Traditional Contributions* Percent Average
1,020 1,208 2,631
31 100 202 291 397 514 763 889 836 590 216 31
Total (in millions) $4,859
378 475 753
109 186 211 174 161 156 167 169 139 80 46 10
Number (in thousands) 1,606
23.5 29.6 46.9
6.8 11.6 13.1 10.8 10.0 9.7 10.4 10.5 8.6 5.0 2.8 0.6
100%
3,950 3,990 4,105
3,070 3,565 3,537 3,513 3,568 3,731 4,492 4,841 5,130 5,256 5,154 3,800
$4,035
Roth Contributions Percent Average
57 140 207 211 238 273 377 416 350 191 52 0
Total (in millions) $2,513 28 60 81 78 80 85 95 99 83 49 15 0
Number (in thousands) 755 2.6 5.5 7.4 7.1 7.3 7.7 8.7 9.0 7.6 4.5 1.4 0.0
69%
Male Percent
3,151 3,528 3,492 3,510 3,613 3,775 4,505 4,744 4,954 5,017 4,972 3,037
$4,318
Average
89 213 284 273 289 320 430 469 413 248 75 0
Total (in millions) $3,105
72 118 129 114 116 126 149 165 153 109 63 17
Number (in thousands) 1,331
4.5 7.3 8.0 7.1 7.2 7.8 9.3 10.3 9.5 6.8 3.9 1.1
83%
3,023 3,483 3,542 3,669 3,819 4,008 4,745 4,973 5,137 5,206 5,138 3,929
$4,554
Unkown Percent Average
Figure 17 Distribution of Traditional* and Roth IRAs Receiving Contributions, by Age and Gender of Account Owner, 2014
4,069 4,111 4,300
3,053 3,469 3,490 3,566 3,695 3,869 4,595 4,842 5,031 5,104 5,072 3,927
$4,195
Source: EBRI IRA Database. * Traditional IRAs in this figure include all Traditional IRAs.
All Age Under 25 25–29 30–34 35–39 40–44 45–49 50–54 55–59 60–64 65–69 70 or older Unknown Gender Female Male Unknown
Number (in thousands) 2,703
All Contributions Percent Average
Figure 16 Distribution of the IRAs Receiving Contributions, by IRA Type and Age and Gender of Account Owner, 2014
218 410 456 418 443 504 708 820 784 569 324 68
Total (in millions) $5,722
1,493 1,897 3,091
334 664 745 611 573 582 752 817 712 418 235 37
Total (in millions) $6,480
Figure 18 Distribution of Contribution and Rollover Amounts to Traditional* and Roth IRAs, 2014 Number (in thousands)
Percent
Contributions All Less than $1,000 $1,000–$1,999 $2,000–$3,999 $4,000–$5,500 $5,501–$6,500 Total Contributions (in millions)
2,703 431 289 339 852 793
100.0% 15.9 10.7 12.5 31.5 29.4 $11,340
Rollovers All Less than $2,000 $2,000–$4,999 $5,000–$9,999 $10,000–$24,999 $25,000–$49,999 $50,000–$74,999 $75,000–$99,999 $100,000–$149,999 $150,000–$249,999 $250,000 or more Total Rollovers (in millions)
1,872 264 261 165 282 247 142 91 120 123 178
100.0 14.1 13.9 8.8 15.1 13.2 7.6 4.8 6.4 6.6 9.5 $169,297
Source: EBRI IRA Database. * Traditional IRAs include all Traditional IRAs.
Figure 19 Distribution of Traditional* and Roth IRAs That Received a Rollover, by Age and Gender of Account Owner, 2014 Tradtional IRAs* Number (in thousands) All 1,705 Age of Account Owner Under 25 28 25–29 106 30–34 135 35–39 135 40–44 147 45–49 163 50–54 195 55–59 211 60–64 246 65–69 189 70 or older 137 Unknown 13 Gender of Account Owner Female 420 Male 548 Unknown 737
Roth IRAs
Percent
Average
Median
Number (in thousands) 168
Percent
Average
Median
$25,827
Total (in millions) $165,638
100%
$21,789
$6,819
Total (in millions) $3,659
100%
$97,174
1.6 6.2 7.9 7.9 8.6 9.6 11.4 12.4 14.4 11.1 8.1 0.8
5,719 8,985 20,944 37,309 55,463 70,089 87,935 123,999 161,707 168,122 154,964 69,544
1,848 3,216 6,458 13,110 20,208 25,071 30,486 40,215 60,000 62,970 50,231 10,363
160 948 2,831 5,024 8,136 11,419 17,138 26,211 39,797 31,813 21,269 893
5 16 19 17 16 16 18 18 18 14 9 1
2.8 9.7 11.6 10.1 9.6 9.6 10.6 10.9 11.0 8.1 5.6 0.5
4,600 8,319 11,891 14,794 16,637 17,478 20,018 26,300 31,138 38,111 54,905 25,738
1,832 3,980 5,500 5,569 5,698 5,994 6,730 8,752 12,086 14,778 15,995 8,747
22 135 231 250 269 281 355 484 573 520 519 22
24.6 32.2 43.2
72,117 112,187 100,286
18,178 29,523 28,809
30,280 61,497 73,862
37 58 73
22.0 34.3 43.7
16,126 22,332 24,214
5,500 6,506 8,790
596 1,285 1,778
Source: EBRI IRA Database. * Traditional IRAs in this figure include all Traditional IRAs.
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100%
1.7 7.3 9.1 8.4 9.0 9.9 12.0 12.5 14.0 9.8 6.2 0.0
7.3 30.7 38.0 35.3 37.6 41.8 50.4 52.6 59.0 41.0 26.2 0.0
4,409 7,310 17,174 30,769 44,773 54,740 68,579 96,396 124,165 125,779 126,068 114,475
$72,117
Female Average
Source: EBRI IRA Database. * Traditional IRAs in this figure include all Traditional IRAs.
All Age Under 25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70 or older Unknown
Percent
Number (in thousands) 419.9 1,803 2,971 4,715 9,477 14,241 17,965 21,725 29,085 45,971 50,000 43,636 74,153
$18,178
Median
32 224 653 1,086 1,683 2,286 3,455 5,072 7,321 5,162 3,305 1
Total (in millions) $30,280 10.0 35.1 44.3 45.2 50.1 55.5 64.5 68.7 81.3 56.2 37.4 0.0
Number (in thousands) 548.2 1.8 6.4 8.1 8.2 9.1 10.1 11.8 12.5 14.8 10.3 6.8 0.0
100%
Percent
4,286 9,580 22,980 40,475 60,385 78,269 100,747 146,175 195,627 202,778 189,005 98,712
$112,187
Male Average
1,891 3,265 6,471 14,002 22,600 29,115 36,428 49,908 76,215 78,693 59,293 14,440
$29,523
Median
43 336 1,017 1,828 3,027 4,341 6,494 10,036 15,909 11,394 7,071 1
Total (in millions) $61,497
10.6 39.7 52.9 54.2 59.0 65.7 80.1 90.1 105.8 92.0 73.6 12.8
Number (in thousands) 736.5
1.4 5.4 7.2 7.4 8.0 8.9 10.9 12.2 14.4 12.5 10.0 1.7
100%
Percent
Figure 20 Distribution of Those Rolling Over to a Traditional* IRA, by Age and Gender of Account Owner, 2014
7,985 9,752 21,951 38,929 58,092 72,943 89,800 123,220 156,559 165,844 147,954 69,494
$100,286
Unkown Average
1,829 3,410 8,234 15,237 22,784 27,456 32,563 41,915 59,259 61,776 50,000 10,347
$28,809
Median
84 388 1,161 2,110 3,427 4,792 7,190 11,103 16,567 15,256 10,893 891
Total (in millions) $73,862
Figure 21 Distribution of Rollovers by Amounts to Traditional* IRAs, by Number and Value of the Rollovers, 2014 59.1%
60% Number of Rollovers
Value of Rollovers
50%
40%
30%
20% 14.5%
13.7%
13.5% 10%
14.2%
13.4%
5.0% 5.1% 4.6%
5.0%
10.4%
8.6%
7.9%
7.6%
6.9%
7.1%
2.5% 0.6%
0.5%
0.1% 0%
Source: EBRI IRA Database. * Traditional IRAs in this figure include all Traditional IRAs.
Figure 22 Distribution of Rollovers by Amounts to Roth IRAs, by Number and Value of the Rollovers, 2014 25% Number of Rollovers 21.2%
Value of Rollovers
20.7%
20.4% 20%
18.0% 16.2%
15.7%
15.1% 15% 12.4% 11.3% 10.4%
10.4%
10% 8.2% 6.5% 4.5%
5% 2.5% 0.8%
2.1%
1.9%
1.2%
0.6%
0%
Source: EBRI IRA Database.
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Withdrawals This study focuses on withdrawals only from Traditional (both types of Traditional IRAs combined) and Roth IRAs, as these account types represent the overwhelming portion of IRA assets; SEP/SIMPLE IRAs have a job link that can distort withdrawal activity. The database contains 19.0 million individuals with Traditional or Roth IRAs amounting to $2.54 trillion in assets. Over 80 percent of these individuals own Traditional IRAs, while a little less than one-third own Roth IRAs (Figure 23).24 Furthermore, 17.3 percent of the individuals who own a Traditional or Roth IRA in the database were younger than age 40 and 63.4 percent were ages 50 or older.25 While just over 80 percent of the individuals examined in the EBRI IRA Database owned Traditional IRAs, 94.9 percent of the individuals taking a withdrawal owned a Traditional IRA (Figure 23).26 Only 19.4 percent of the individuals who took a withdrawal owned a Roth IRA. The disparity between the withdrawal rates between the IRA types is due almost entirely to the required minimum distribution (RMD) rules that apply to Traditional IRAs but not to Roth IRAs.27
Figure 23 Distribution of the Individuals With Withdrawals from Traditional* and Roth IRAs, by Various Characteristics, 2014
All Type^ Traditional Roth Age of Account Ow ner Less than 30 30–39 40–49 50–59 60–64 65–70 71–79 80 or older Unknow n Account Balance Less than $5,000 $5,000–$9,999 $10,000–$24,999 $25,000–$49,999 $50,000–$99,999 $100,000–$149,999 $150,000–$249,999 $250,000 or more Gender of Account Ow ner Female Male Unknow n
All 100.0%
All With Withdraw al 100.0%
Traditional With Withdraw al 100.0%
Roth With Withdraw al 100.0%
81.9 32.1
94.9 19.4
100.0 13.8
46.0 100.0
4.9 12.4 18.0 24.4 12.2 12.2 9.9 4.7 1.3
1.5 4.4 7.2 11.6 10.0 14.1 33.1 16.5 1.6
1.0 3.1 6.2 11.0 9.9 14.5 35.2 17.6 1.7
7.1 16.6 18.1 19.9 13.6 13.1 8.4 2.4 0.8
19.7 8.1 14.4 13.5 14.4 7.7 8.2 14.1
9.3 5.0 11.3 12.8 15.8 9.7 11.4 24.8
8.4 4.6 10.9 12.6 15.9 9.9 11.8 26.0
23.2 8.8 14.3 12.1 12.4 6.6 7.5 15.1
26.7 31.6 41.8
25.3 31.9 42.8
25.3 31.8 42.9
25.1 33.2 41.7
So urce: EB RI IRA Database. ^ The type catego ries add up to mo re than 100% because individuals co uld have mo re than o ne type o f IRA . * Traditio nal IRA s in this figure include all Traditio nal IRA s
Looking at withdrawal activity by age, 63.8 percent of the individuals taking a withdrawal were ages 65 or older and just below half (49.6 percent) were ages 71 or older, while just 13.0 percent were younger than age 50. For Traditional IRA owners taking a withdrawal, the age distribution followed the overall age distribution, with 67.2 percent ages 65 or older and 52.7 percent ages 71 or older.28 In contrast, among Roth IRA owners who took a withdrawal, 41.9 percent were younger than age 50 and only 10.9 percent were ages 71 or older.
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Just over 63 percent of the individuals owning Traditional IRAs who took a withdrawal had account balances of $50,000 or more, and 26.0 percent had balances of $250,000 or more.29 Among Roth owners who took a withdrawal, 32.0 percent had balances of less than $10,000. Similar percentages of Roth and Traditional owners with a withdrawal were males, with 31.8 percent for Traditional and 33.2 percent for Roth (55.7 percent and 57.0 percent, respectively, for those with an identified gender).
Percentage of Individuals Taking a Withdrawal—Among Traditional IRA owners in the database, 27.2 percent had a withdrawal in 2014, compared with 4.6 percent of Roth owners (Figure 24). For Traditional IRA owners ages 30 and above, the percentage taking a withdrawal increased from 8.6 percent for those in their 30s to 87.2 percent among those ages 80 or older. For Roth IRA owners, the percentage with a withdrawal was right at 4 percent for those ages less than 60, and increased from 6.2 percent for those ages 60‒64 to 7.5 percent for those ages 80 or older. Figure 24 Percentage of Individuals Owning IRAs With a Withdrawal, by Various Characteristics, 2014
All Age of Account Ow ner Less than 30 30–39 40–49 50–59 60–64 65–70 71–79 80 or older Unknow n Account Balance Less than $5,000 $5,000–$9,999 $10,000–$24,999 $25,000–$49,999 $50,000–$99,999 $100,000–$149,999 $150,000–$249,999 $250,000 or more Gender of Account Ow ner Female Male Unknow n
All With Withdraw al 23.9%
Traditional With Withdraw al 27.2%
Roth With Withdraw al 4.6%
7.0 8.4 9.5 11.4 19.6 27.6 80.0 83.5 30.2
9.8 8.6 9.8 11.8 20.4 28.9 85.4 87.2 33.3
3.5 4.1 3.9 4.1 6.2 6.5 6.5 7.5 4.3
11.3 14.7 18.8 22.6 26.2 29.8 33.2 42.0
12.7 18.6 23.0 26.9 30.0 32.6 35.3 43.8
6.7 3.6 3.7 3.8 4.0 4.8 6.9 10.4
22.6 24.1 24.5
25.7 27.2 28.2
4.4 5.0 4.5
So urce: EB RI IRA Database.
With respect to the account balances of the Traditional IRA owners, the percentage taking a withdrawal increased from 12.7 percent for individuals with balances less than $5,000 to 43.8 percent for those with $250,000 or more.30 For Roth IRA owners with balances greater than $5,000, the percentage taking a withdrawal also increased with account balance size, as 3.6 percent of individuals with balances of $5,000‒$9,999 took a withdrawal compared with 10.4 percent of those with balances of $250,000 or more. There was little difference in withdrawal trends by gender, with males and females taking withdrawals at 27.2 percent and 25.7 percent, respectively, among Traditional IRA owners and 5.0 percent and 4.4 percent among Roth IRA owners.
Average and Median Withdrawal Amounts—The average withdrawal amounts from Traditional IRAs increased with the age of the owners through age 64, from $9,177 (among those younger than age 30) to $29,082 (among those ages 60–64) (Figure 25).31 At that point, the average withdrawal amount started to decline with age,
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leveling off at just over $17,900 for those ages 71 or older. The average withdrawal amounts of those taking a withdrawal from a Roth IRA also increased with the age of the owner, but, in contrast to the trend of Traditional IRA withdrawals, continued through ages 80 or older, from $4,689 for those younger than age 30 to $35,458 among those ages 80 or older. Overall, the average Traditional IRA withdrawal amount ($20,796) exceeded the average Roth IRA withdrawal amount ($12,550).
Figure 25 Average Individual Withdrawal Amounts from Individual Retirement Accounts, by Various Characteristics, 2014
All Age Less than 30 30–39 40–49 50–59 60–64 65–70 71–79 80 or older Unknow n Account Balance Less than $5,000 $5,000–$9,999 $10,000–$24,999 $25,000–$49,999 $50,000–$99,999 $100,000–$149,999 $150,000–$249,999 $250,000 or more Gender Female Male Unknow n
All With Withdraw al $20,530
Traditional With Withdraw al $20,796
Roth With Withdraw al $12,550
7,888 11,365 17,381 21,804 28,587 28,019 18,240 18,290 15,967
9,177 12,873 19,024 22,693 29,082 27,898 17,930 17,966 15,905
4,689 6,585 8,170 11,108 15,010 18,257 24,423 35,458 11,672
15,171 7,379 7,987 9,011 11,121 14,193 18,176 46,370
16,360 7,174 7,744 8,888 11,164 14,509 18,683 47,001
7,618 6,084 7,856 9,813 12,516 17,980 26,794 94,451
13,192 21,331 24,264
13,313 21,812 24,460
7,996 10,659 16,800
So urce: EB RI IRA Database.
Among owners of Traditional IRAs with balances of $5,000 or more, the average withdrawal amount increased as the account balance increased, with the average withdrawal reaching $47,001 for owners with balances of $250,000 or more. Similar trends were seen in Roth IRAs, where average withdrawal amounts increased as the account balance increased starting with balances of $5,000 or more. Males had higher average withdrawal amounts than females: for example, for Traditional IRA owners, $21,812 for men compared with $13,313 for women.32 However, there is significant variation in the amounts withdrawn from IRAs that cannot be ascertained from just examining these averages. Figure 26 presents the 25th percentile, median (midpoint, half above and half below), and 75th percentile for each factor examined. The overall median withdrawal amount of those taking a withdrawal from a Traditional IRA was $7,758, while the 75th percentile of the withdrawal amounts was $20,400. This value for the 75th percentile was roughly $400 less than the average amount from Traditional IRAs. Consequently, there were some very large withdrawal amounts relative to the median withdrawal. The medians of the withdrawal amounts mostly followed the same patterns as the averages relative to the IRA owners’ age and account balance.
Withdrawal Rates of Those Taking a Withdrawal—Another measure of the withdrawals taken is to consider what percentage (or rate) the withdrawal for those taking a withdrawal represents as a fraction of the yearend account balance plus the withdrawal.33 The median withdrawal rate for those taking a withdrawal from Traditional IRAs was 5.8 percent, compared with 21.7 percent for those taking a withdrawal from Roth IRAs (Figure 27). The median withdrawal rates were much higher for younger owners of Traditional IRAs, where the median withdrawal rate ebri.org Issue Brief • August 2016 • No. 424
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Figure 26 Distribution of Withdrawal Amounts for Those Taking a Withdrawal from IRAs, by Various Characteristics, 2014
All Age of Account Owner Less than 30 30–39 40–49 50–59 60–64 65–70 71–79 80 or older Unknown Account Balance Less than $5,000 $5,000–$9,999 $10,000–$24,999 $25,000–$49,999 $50,000–$99,999 $100,000–$149,999 $150,000–$249,999 $250,000 or more Gender of Account Owner Female Male Unknown
All With Withdrawal 25th Prtl Median 75th Prtl $2,637 $7,425 $20,000
Traditional With Withdrawal 25th Prtl Median 75th Prtl $2,676 $7,758 $20,400
Roth With Withdrawal 25th Prtl Median 75th Prtl $1,000 $4,223 $10,000
900 1,983 2,200 2,100 4,000 4,800 2,491 2,366 2,507
3,000 5,500 6,000 6,780 11,327 12,000 6,886 6,219 6,509
7,386 11,435 18,000 20,000 29,432 28,000 18,000 17,116 16,041
946 1,900 2,232 2,108 4,111 4,847 2,481 2,358 2,508
2,932 5,500 7,300 7,300 12,000 12,000 6,839 6,189 6,512
8,406 14,045 20,110 21,847 30,000 28,200 17,967 17,000 16,011
400 750 602 715 1,746 1,986 2,000 2,900 1,420
2,000 3,500 3,500 4,000 5,461 5,600 5,742 8,211 4,842
5,500 7,500 8,291 9,100 12,800 14,000 15,000 24,000 11,111
572 360 822 1,600 2,937 4,761 6,800 13,931
3,224 1,700 1,993 2,813 4,700 6,625 10,000 25,000
10,800 6,716 8,000 8,400 10,000 12,500 17,104 48,091
644 350 800 1,597 3,000 4,942 7,288 15,000
4,000 1,097 1,568 2,581 4,507 6,848 10,116 25,650
11,635 6,652 7,400 8,000 10,000 12,750 17,647 49,545
700 139 709 1,405 2,134 3,100 4,753 8,581
2,788 2,900 4,000 5,000 5,700 6,715 9,203 24,000
6,938 6,937 10,000 10,500 12,000 16,933 25,000 70,000
1,974 3,126 2,891
5,500 9,394 7,800
14,000 24,000 21,066
1,995 3,250 2,900
5,550 10,000 8,000
14,333 25,000 21,892
500 900 1,500
3,152 4,073 5,000
8,000 10,000 11,000
Source: EBRI IRA Database.
Figure 27 Distribution of Withdrawal Rates for Those Taking a Withdrawal from IRAs, by Various Characteristics, 2014 All Age of Account Owner Less than 30 30–39 40–49 50–59 60–64 65–70 71–79 80 or older Unknown Account Balance Less than $5,000 $5,000–$9,999 $10,000–$24,999 $25,000–$49,999 $50,000–$99,999 $100,000–$149,999 $150,000–$249,999 $250,000 or more Gender of Account Owner Female Male Unknown
All With Withdrawal 25th Prtl Median 75th Prtl 3.8% 5.8% 16.3%
Traditional With Withdrawal 25th Prtl Median 75th Prtl 3.9% 5.8% 15.5%
Roth With Withdrawal 25th Prtl Median 75th Prtl 4.4% 21.7% 57.9%
3.0 8.0 4.0 3.0 3.7 3.4 3.7 5.4 4.0
29.1 31.3 22.6 11.2 9.4 6.5 4.3 6.3 5.6
67.6 68.1 57.9 41.5 29.2 17.4 6.1 8.4 9.8
1.7 10.6 4.2 3.1 3.9 3.5 3.8 5.4 4.1
27.6 45.5 28.7 12.4 9.7 6.7 4.3 6.4 5.6
85.6 90.1 70.0 45.3 30.1 17.9 6.2 8.4 9.6
5.2 8.0 3.6 3.1 4.8 4.9 4.4 4.3 4.0
35.5 34.6 27.5 19.6 20.9 15.9 11.7 11.1 14.8
74.8 72.0 66.5 55.5 53.7 44.9 32.9 29.0 48.7
38.8 4.5 4.5 4.2 3.9 3.7 3.6 3.2
81.4 18.7 9.8 7.0 5.9 5.1 4.8 4.3
98.4 50.0 33.2 18.9 12.1 9.3 8.0 6.4
40.8 4.4 4.4 4.2 4.0 3.9 3.7 3.5
86.6 13.3 8.2 6.6 5.8 5.2 5.0 4.4
99.5 49.2 31.4 18.2 12.0 9.4 8.2 6.5
44.7 1.9 4.1 3.8 3.0 2.6 2.4 2.0
76.6 27.9 19.8 12.3 7.5 5.4 4.5 4.4
95.4 50.0 37.0 24.1 15.4 12.3 11.7 11.4
3.7 3.7 3.9
5.6 5.8 5.9
16.2 16.6 16.3
3.8 3.9 4.0
5.6 5.8 5.8
15.7 16.1 14.9
2.7 3.7 6.3
17.3 20.1 25.9
51.1 56.9 63.2
Source: EBRI IRA Database.
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for owners in their 30s was 45.5 percent. The median withdrawal rate decreased for each older age group through ages 71–79, reaching 4.3 percent. There was an uptick in the median rate for the oldest age group, where it hit 6.4 percent for owners ages 80 or older.34 The median withdrawal rates among Roth IRA owners steadily declined for ages up to 59, when the median withdrawal rate increased for those ages 60‒64 and started decreasing again for those above that age. Specifically, for Roth owners younger than 30, the median withdrawal rate was 35.5 percent. The rate decreased to 19.6 percent for those in their 50s and increased to 20.9 for those ages 60‒64, before falling and reaching 11.1 percent for those ages 80 or older. The median withdrawal rates declined as account balances increased, both for those taking withdrawals from Traditional and Roth IRAs. In particular, the median withdrawal rate for Traditional IRAs was 86.6 percent for accounts with less than $5,000, compared with 4.4 percent for accounts of $250,000 or more. The median withdrawal rates for Roth IRAs followed a similar pattern, dropping from 76.6 percent (for accounts with less than $5,000) to 4.4 percent (among accounts with balances of $250,000 or more). The distributions of the withdrawal rates for males and females were almost identical. Withdrawal rates of males taking a withdrawal had a distribution of 3.7 percent at the 25th percentile, 5.8 percent at the median, and 16.6 percent at the 75th percentile. The comparable distribution for females was 3.7 percent, 5.6 percent, and 16.2 percent, respectively.
Older IRA Owners and Required Minimum Distributions—The year after individuals reach age 70-½ they must begin to take a required minimum distribution (RMD) from their Traditional IRAs. The distribution each year is based on the person’s age and the total Traditional IRA balance at the end of the prior year. Therefore, comparing the RMD with the actual amount withdrawn from the Traditional IRA can show whether those who have reached the age where the distributions are required are merely following the rule or if they are withdrawing an amount in excess of the required amount. In order to determine the extent of individuals withdrawing in excess of the required amount, the withdrawals from Traditional IRAs of those individuals who are age 71 or older are compared with their RMDs. In 2014 from the EBRI IRA Database, 24.5 percent of those ages 71 or older were found to have Traditional IRA withdrawals in excess of their RMDs (Figure 28). Among those with balances less than $5,000, 51.6 percent had withdrawal amounts greater than their RMDs. This percentage decreased to 30.1 percent for those with an account balance of $5,000‒ $9,999 and to 26.0 percent for those with an account balance of $10,000‒$24,999. Above those balances the percentage gradually declined to 21.8 percent for those with account balances of $250,000 or more.
Asset Allocation The assets in the EBRI IRA Database are divided into five categories: Equities—equity mutual funds, directly held individual stocks, and other 100 percent equity-investment vehicles; Bonds—bond mutual funds, directly held bonds, and other 100 percent bond-investment vehicles; Money—money market mutual funds, money market savings accounts, and certificates of deposit; Balanced funds—balanced, lifestyle/lifecycle, target-date funds, and any other funds that have a partial investment in both equities and bonds; Other assets—any remaining assets that do not fit into the above categories, such as stable-value funds, real estate (both investment trusts and directly purchased), fixed and variable annuities, etc. In the EBRI IRA Database for those accounts with complete asset-allocation data in 2014,35 55.7 percent of the assets were in equities, 10.7 percent in balanced funds, 14.9 percent in bonds, 10.5 percent in money, and 8.1 percent in ebri.org Issue Brief • August 2016 • No. 424
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Figure 28 Percentage of Individuals Age 71 or Older Withdrawing an Amount Greater Than the Required Minimum Distribution From Their Traditional IRA, by Account Balance, 2014 60%
51.6% 50%
40%
30.1% 30% 24.5%
26.0% 24.0%
23.3%
23.0%
23.0%
21.8%
20%
10%
0%
Source: EBRI IRA Database.
other assets (Figure 29).36, 37 When combining the equity share of balanced funds with the equity allocation, the total equity exposure of IRA owners was 62.1 percent of the assets.38 IRAs owned by males and females had nearly equal average allocations to bonds, equities, and money. However, male-owned accounts were more likely to have assets in the other-assets category, while female-owned accounts had a higher percentage of assets in balanced funds. For IRAs owned by those ages 25 or older, the percentage allocated to bonds increased with the age of the owner, while the percentage allocated to equities with the equity share from balanced funds decreased through age 74. The amount allocated to other assets increased through age 74, and the amount allocated to balanced funds decreased as the age of the IRA owners increased from ages 25 through age 84. The percentage of IRA assets in equities had no clear pattern across the ages of the owners. For IRAs owned by those under age 25, 59.1 percent of the assets were in equities. This percentage decreased to 58.7 percent for accounts owned by those ages 25‒44, then increased to 62.0 percent for owners ages 45‒54. The percentage again decreased to 56.5 percent for owners ages 55‒64, before falling to 52.9 percent for owners ages 65‒69. The percentage remained at near 53 percent for the accounts owned by those ages 70 or older. The percentage of assets allocated to other assets and to bonds increased as the account balance increased from less than $5,000 to $250,000 or more (from 1.9 percent to 9.1 percent and from 3.5 percent to 17.5 percent, for other assets and bonds, respectively). The percentage of assets in money decreased from 39.6 percent for accounts with less than $5,000 to 17.6 percent for accounts with $5,000‒$9,999, then continued a slow decline reaching 9.8 percent for accounts of $250,000 or more. The percentage of assets allocated to balanced funds increased from 17.5 percent for accounts with less than $5,000 to 22.9 percent for accounts with $5,000‒$9,999, after which they decreased as the account balance increased. The percentage of assets allocated to equities increased from 37.4 percent for accounts with less than $5,000 to 56.6 percent for accounts with balances of $100,000‒$149,999 and fell just below 56 percent for accounts of $150,000 or more. ebri.org Issue Brief • August 2016 • No. 424
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Figure 29 IRA Asset Allocation, by Various Characteristics, 2014 Balanced Funds a All 10.7% Gender of Account Owner Female 15.8 Male 12.4 Unknow n 6.8 Age of Account Owner Less than 25 14.8 25–44 19.7 45–54 13.0 55–64 10.9 65–69 9.5 70–74 8.4 75–84 8.1 85 or older 8.4 Unknown 10.8 Account Balance Less than $5,000 17.5 $5,000–$9,999 22.9 $10,000–$24,999 22.1 $25,000–$49,999 19.6 $50,000–$99,999 16.4 $100,000–$149,999 13.6 $150,000–$249,999 12.2 $250,000 or more 7.7
Equity d 55.7%
Equity With Balancedb 62.1%
Bond 14.9%
Money c 10.5%
Other 8.1%
51.6 52.6 60.4
61.1 60.1 64.5
13.4 13.9 16.6
10.8 11.3 9.8
8.4 9.8 6.4
59.1 58.7 62.0 56.5 52.9 52.9 53.4 53.1 51.1
68.0 70.6 69.7 63.0 58.5 58.0 58.3 58.1 57.5
9.5 5.9 8.9 14.1 17.7 18.6 19.3 20.1 15.7
11.8 11.2 10.5 10.8 10.8 10.3 9.6 9.5 11.5
4.8 4.6 5.7 7.8 9.2 9.7 9.6 8.9 11.0
37.4 51.6 53.0 54.4 55.7 56.6 55.7 55.9
47.9 65.3 66.3 66.2 65.6 64.7 63.0 60.5
3.5 5.2 6.7 8.7 10.5 11.8 13.3 17.5
39.6 17.6 14.8 12.8 11.4 10.7 10.6 9.8
1.9 2.6 3.3 4.6 6.0 7.4 8.3 9.1
So urce: EB RI IRA Database. a B alanced
funds include balanced funds, lifecycle/lifestyle funds, target-date funds, and any o ther funds that have a partial investment in bo th equities and bo nds.
b Equity with
balanced includes the equity allo catio n plus 60 percent o f the balanced-fund allo catio n. This pro vides an estimate o f the to tal percentage o f assets in equities fo r IRA o wners. c M o ney includes mo ney market mutual funds, mo ney market savings acco unts, and certificates o f depo sit (CDs). d Equity includes
vehicles.
directly held individual sto cks, equity mutual funds, and o ther 100 percent equity-investment
Roth IRAs had the highest share of assets in equities (64.5 percent) and balanced funds (14.0 percent) (Figure 30). Traditional IRAs had the lowest percentage in equities (at 52.9 percent to 56.1 percent). At the same time, Traditional IRAs had higher average allocations to bonds and money than Roth IRAs.
Allocations Within IRA Types Gender—Within each IRA type, the asset allocation differences between genders was minimal (Figure 31): The bond, equity, and money allocation differences were particularly trivial. For example, in Traditional IRAs, maleowned accounts had 14.9 percent of their assets in bonds and 51.6 percent in equities, while female-owned accounts had 14.5 percent and 50.3 percent, in bonds and equities, respectively. The one consistent difference across the three IRA types (Traditional IRAs, Roth IRAs, and SEPs/SIMPLEs) was that male-owned accounts had a higher share in other assets, while female-owned accounts had more in balanced funds.
Age—The average equity allocation was higher across all age groups for Roth IRAs than for the other IRA types, while Traditional IRAs had the lowest average equity allocations among owners of all ages 45 or older (Figure 32). Correspondingly, SEPs/SIMPLEs and Traditional IRAs had higher average allocations to money and bonds among owners in each age group. Among IRAs owned by those younger than age 70, the highest average amounts allocated to balanced funds were found in Roth IRAs.
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Figure 30 IRA Asset Allocation, by IRA Type, 2014 64.5%
70%
58.8%
Roth 54.6%
56.1%
52.9%
60%
Traditional-Contributions
Traditional-Rollovers SEP/SIMPLE Traditional-All
50%
40%
8.5%
6.6%
7.4%
10.7% 5.7%
12.4%
10.7%
12.1%
8.3%
9.1%
16.0%
10.9%
15.0%
16.0%
11.2%
10.3%
7.5%
10%
14.0%
11.3%
20%
9.5%
30%
0% Balanced Funds
Equity
Bond
Money
Other
Source: EBRI IRA Database. Balanced funds include balanced funds, lifecycle/lifestyle funds, and target-date funds. Equity includes directly held indivdiual stocks, equity mutual funds, and other 100 percent equity-investment vehicles. Money includes money market mutual funds and certificates of deposit (CDs).
Account Balance—For each IRA type, the percentage allocated to bonds and other assets increased and the percentage allocated to balanced funds decreased (except in Traditional and Roth IRAs with less than $5,000), as the account balance increased (Figure 33). Furthermore, as the account balance increased, the amount allocated to money decreased in Traditional IRAs and SEPs/SIMPLEs, but after an initial decrease in Roth IRAs the allocation to money increased when balances reached $150,000. The average allocation to equities increased with the size of the account balance through balances of $100,000– $149,999 for Traditional IRAs and Roth IRAs and for all ages for SEPs/SIMPLEs. Above these amounts, allocations to equities leveled off for Traditional IRAs and declined for Roth IRAs.
Allocations by Gender Age—The average IRA asset allocation was very similar across genders and ages of their owners (Figure 34). For instance, IRAs owned by females and males ages 45‒54 had 57.3 percent and 59.1 percent, respectively, in equities, while among those ages 75‒84, female-owned had 48.8 percent and male-owned had 50.3 percent in equities. Furthermore, IRAs owned by both genders had average allocations to bonds and other assets that increased with age above age 25 (except for males 85 older where the percentages fell), while the allocation to money bounced around the 10-percent-to-12-percent range as the age of the owner increased above age 25. The average amount allocated to balanced funds decreased as the age of the owner increased (for owners ages 25 or older) among each gender (except for males ages 85 or older). However, male-owned accounts’ allocations to other assets were at least as large as female-owned accounts’ allocations across all age groups, and female-owned accounts had higher average allocations to balanced funds (except for males ages 85 or older).
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Figure 31 IRA Asset Allocation, by IRA Type and Gender of Account Owner, 2014 Type/Gender Traditional Female Male Unknown Roth Female Male Unknown SEP/SIMPLE Female Male Unknown
Balanced Fundsa
Equityb
Bond
Moneyc
Other
15.2% 12.0 6.7
50.3% 51.6 59.0
14.5% 14.9 17.6
11.2% 11.4 9.8
8.9% 10.1 6.9
19.3 14.9 9.4
60.5 61.0 70.7
6.7 7.2 8.3
7.9 8.7 8.3
5.5 8.2 3.4
17.5 13.7 3.2
52.9 54.8 68.8
10.2 10.3 12.4
12.2 12.3 12.8
7.2 8.9 2.8
Source: EBRI IRA Database. a Balanced funds include balanced funds, lifecycle/lifestyle funds, and target-date funds. b Equity includes directly held individual stocks, equity mutual funds, and other 100 percent equityinvestment vehicles. c Money includes money market mutual funds, money market savings accounts, and certificates of deposit (CDs).
Figure 32 IRA Asset Allocation, by IRA Type and Age of Account Owner, 2014 Type/Age Traditional Less than 25 25–44 45–54 55–64 65–69 70–74 75–84 85 or older Unknown
Balanced Fundsa
Equityb
Bond
Moneyc
Other
7.0% 18.6 12.8 10.7 9.4 8.5 8.1 8.2 10.5
57.5% 56.9 61.0 55.6 51.9 51.9 52.6 52.7 50.4
15.9% 6.9 9.5 14.8 18.4 19.4 19.9 20.6 16.0
14.2% 12.7 10.8 10.8 10.8 10.4 9.6 9.6 11.7
5.4% 4.9 5.9 8.1 9.4 9.9 9.7 8.9 11.4
23.2 22.2 14.4 13.2 10.5 8.1 7.3 11.6 15.1
61.3 63.3 67.9 63.8 63.6 64.6 64.5 57.5 63.4
2.8 3.6 5.4 8.5 10.0 9.9 10.9 14.1 10.4
8.6 7.2 7.7 8.9 9.1 9.2 8.9 8.4 6.8
4.1 3.7 4.6 5.6 6.9 8.1 8.4 8.5 4.3
19.2 19.5 12.7 10.4 8.6 8.1 7.8 8.1 17.9
49.5 56.1 62.2 59.1 56.5 56.3 56.5 57.9 63.6
5.4 5.8 7.8 11.3 14.2 15.3 15.5 14.7 12.1
21.1 13.7 12.1 12.6 12.8 11.7 11.0 9.8 5.4
4.9 5.0 5.3 6.6 7.9 8.5 9.3 9.6 1.0
Roth Less than 25 25–44 45–54 55–64 65–69 70–74 75–84 85 or older Unknown SEP/SIMPLE Less than 25 25–44 45–54 55–64 65–69 70–74 75–84 85 or older Unknown
Source: EBRI IRA Database. a Balanced funds include balanced funds, lifecycle/lifestyle funds, and target-date funds. b Equity includes directly held individuial stocks, equity mutual funds, and other 100 percent equityinvestment vehicles. c Money includes money market mutual funds, money market savings accounts, and certificates of deposit (CDs).
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Figure 33 IRA Asset Allocation, by IRA Type and Account Balance, 2014 Balanced Type/Account Balance Traditional Less than $5,000 $5,000–$9,999 $10,000–$24,999 $25,000–$49,999 $50,000–$99,999 $100,000–$149,999 $150,000–$249,999 $250,000 or more Roth Less than $5,000 $5,000–$9,999 $10,000–$24,999 $25,000–$49,999 $50,000–$99,999 $100,000–$149,999 $150,000–$249,999 $250,000 or more SEP/SIMPLE Less than $5,000 $5,000–$9,999 $10,000–$24,999 $25,000–$49,999 $50,000–$99,999 $100,000–$149,999 $150,000–$249,999 $250,000 or more
Funds a
Equity b
Bond
Money c
Other
13.6% 21.6 21.4 19.4 16.3 13.9 12.5 7.8
28.2% 48.3 49.9 51.2 52.8 54.3 54.3 55.3
3.6% 6.2 7.9 10.0 11.8 12.7 13.9 18.0
52.9% 21.1 17.1 14.4 12.4 11.2 10.7 9.8
1.7% 2.7 3.6 5.1 6.7 7.9 8.6 9.1
22.9 24.5 23.2 20.2 16.6 11.3 8.3 5.0
53.3 56.7 58.5 61.3 64.7 70.2 69.2 65.6
3.1 4.0 5.0 6.2 7.1 7.1 8.1 10.6
18.2 12.1 10.3 8.7 7.4 6.4 7.8 8.5
2.5 2.7 3.0 3.7 4.3 5.1 6.5 10.4
23.6 22.8 21.9 19.6 16.8 14.4 12.4 7.5
38.7 45.4 50.2 54.1 56.6 57.9 59.1 60.7
4.0 4.9 5.9 7.0 8.3 9.5 10.4 12.7
32.2 24.9 19.7 16.2 14.1 13.0 12.2 10.9
1.6 1.9 2.3 3.1 4.2 5.3 6.0 8.2
So urce: EB RI IRA Database. a B alanced
funds include balanced funds, lifecycle/lifestyle funds, and target-date funds.
b Equity includes
directly held individual sto cks, equity mutual funds, and o ther 100 percent equity-investment
vehicles. c M o ney includes mo ney market mutual funds, mo ney market savings acco unts, and certificates o f depo sit (CDs).
Account Balance—For accounts owned by each gender, the average asset-allocation trends were very similar, as the account balance increased (Figure 35). The percentage allocated to bonds and other assets increased with the size of the account balance, and the percentage allocated to money (except for males with balances $150,000‒$249,999) and balanced funds (for accounts with balances of $5,000 or more) decreased. The percentage allocated to equities initially increased with the account balance (through $100,000–$149,999). Above those account balances, the percentage allocated to equities declined. Furthermore, as with age, the percentage allocated to balanced funds was consistently higher for female-owned accounts, and the percentage allocated to other assets was consistently higher for male-owned accounts for each account-balance category (except for accounts with $250,000 or more where both genders have the same allocation to other assets).
Allocations by Age Account Balance—The same general asset-allocation patterns noted above emerged for each age category and account-balance category, particularly for account balances of $5,000 or more (Figure 36). In general, the percentage allocated to balanced funds decreased (for accounts with balances of $5,000 or more) and to other assets and bonds increased for older IRA owners and those with higher balances. For accounts with balances above $5,000, the percentage allocated to money was relatively consistent for each age and account-balance category, while equity allocations were similar within each age group for account balances of $5,000 or more.
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Figure 34 IRA Asset Allocation, by Gender and Age of Account Owner, 2014 Balanced Gender/Age Female Less than 25 25–44 45–54 55–64 65–69 70–74 75–84 85 or older Unknow n Male Less than 25 25–44 45–54 55–64 65–69 70–74 75–84 85 or older Unknow n Unknow n Less than 25 25–44 45–54 55–64 65–69 70–74 75–84 85 or older Unknow n
Funds a
Equity b
Bond
Money c
Other
20.3% 25.4 17.7 15.8 14.2 12.9 12.3 10.9 12.8
53.1% 52.9 57.3 52.0 48.9 49.1 48.8 47.8 63.1
5.4% 5.4 8.2 12.9 16.4 17.2 18.3 19.7 10.1
14.3% 11.7 10.8 11.0 11.0 10.4 10.0 10.7 12.7
7.0% 4.6 6.0 8.3 9.6 10.3 10.5 10.9 1.3
19.6 20.4 14.2 12.5 11.4 10.3 10.0 11.0 7.8
54.3 56.7 59.1 53.4 49.5 49.2 50.3 50.4 60.9
4.6 5.6 8.1 13.0 16.5 17.6 17.9 17.8 7.7
14.3 11.3 11.4 11.7 11.7 11.1 10.0 9.3 21.7
7.2 6.0 7.2 9.3 11.0 11.8 11.8 11.6 2.0
11.4 15.0 8.6 6.7 5.7 5.0 4.7 5.1 10.8
62.8 64.9 67.9 61.9 57.6 57.6 57.9 57.8 50.9
12.6 6.4 10.0 15.7 19.3 20.2 20.8 22.3 15.8
10.0 10.7 9.6 9.8 9.9 9.6 9.1 9.2 11.4
3.3 3.0 3.9 6.0 7.5 7.6 7.5 5.6 11.1
So urce: EB RI IRA Database. a B alanced
funds include balanced funds, lifecycle/lifestyle funds, and target-date funds.
b Equity includes
directly held individual sto cks, equity mutual funds, and o ther 100 percent equityinvestment vehicles. c M o ney includes mo ney market mutual funds, mo ney market savings acco unts, and certificates o f depo sit (CDs).
“Extreme” Allocations Having examined the tremendous variation around the average allocation among all IRAs depending on the characteristics of the IRA owners, this section investigates what percentage of IRAs have so-called “extreme” allocations, defined here as having less than 10 percent or more than 90 percent in a particular asset category.39 Overall, 27.0 percent of IRAs have less than 10 percent in equities and 27.9 percent have more than 90 percent in equities (Figure 37).40 Furthermore, just short of 1 in 5 IRAs (17.2 percent) had more than 90 percent of their assets in bonds and money.
Type—Roth IRAs had the highest percentage with more than 90 percent in equities and the lowest percentage with more than 90 percent in money, while TOFR IRAs had the lowest percentage with more than 90 percent in equities (Figure 37). Roth IRAs were more likely to have extremely low percentages of money and bonds combined (51.6 percent). In contrast, TOFR IRAs were much more likely to have less than 10 percent in equities and more than 90 percent in money.
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Figure 35 IRA Asset Allocation, by Gender of Account Owner and Account Balance, 2014 Balanced Gender/Account Balance Female Less than $5,000 $5,000‒$9,999 $10,000‒$24,999 $25,000‒$49,999 $50,000‒$99,999 $100,000‒$149,999 $150,000‒$249,999 $250,000 or more Male Less than $5,000 $5,000‒$9,999 $10,000‒$24,999 $25,000‒$49,999 $50,000‒$99,999 $100,000‒$149,999 $150,000‒$249,999 $250,000 or more Unknow n Less than $5,000 $5,000‒$9,999 $10,000‒$24,999 $25,000‒$49,999 $50,000‒$99,999 $100,000‒$149,999 $150,000‒$249,999 $250,000 or more
Funds a
Equity b
Bond
Money c
Other
19.4% 25.9 25.8 24.6 21.5 18.4 16.6 10.9
33.1% 47.1 48.8 50.3 52.4 53.5 52.4 51.5
4.1% 5.7 6.9 8.0 9.6 11.0 12.7 16.8
41.9% 19.1 16.0 13.6 11.8 10.8 10.6 9.3
1.6% 2.2 2.6 3.5 4.7 6.2 7.8 11.6
16.2 22.0 21.8 20.5 17.7 15.1 13.9 10.1
35.4 51.6 52.9 53.7 54.8 55.2 53.7 51.8
3.7 5.2 6.3 7.4 9.0 10.2 11.7 16.2
42.7 18.2 15.5 13.8 12.7 12.2 12.2 10.3
2.1 3.0 3.5 4.5 5.8 7.3 8.5 11.6
17.0 21.1 19.4 15.0 11.6 9.2 8.2 4.2
43.0 55.4 56.6 58.1 58.9 59.7 59.2 61.4
2.9 4.8 7.0 10.2 12.5 13.6 15.0 19.0
35.0 16.0 13.3 11.3 9.9 9.3 9.2 9.5
2.1 2.7 3.8 5.4 7.1 8.2 8.4 5.9
So urce: EB RI IRA Database. a B alanced
funds include balanced funds, lifecycle/lifestyle funds, and target-date funds.
b Equity includes
directly held individual sto cks, equity mutual funds, and o ther 100 percent equity-investment
vehicles. c M o ney includes
mo ney market mutual funds, mo ney market savings acco unts, and certificates o f depo sit
(CDs).
Gender—The likelihood of extreme allocations was very similar across the gender of the owners. For instance, 27.5 percent of accounts owned by each gender had more than 90 percent in equities. Similarly, 62.4 percent of female-owned accounts had less than 10 percent in bonds, while 65.9 percent of male-owned accounts did. Age—As the age of the IRA owner increased above age 54, the less likely the accounts were to have more than 90 percent in equities (Figure 37). The percentage of accounts with more than 90 percent in money decreased with the age of IRA owner for owners ages 25–84. However, the share of IRAs with more than 90 percent in bonds and money combined remained in the 14.0‒17.0 percentage range among IRAs owned by individuals ages 45‒84, while it increased to 18.9 percent for accounts with owners ages 85 or older.
Account Balance—In general, IRAs with higher account balances were less likely to have extreme allocations (Figure 37). For instance, while 38.5 percent of accounts with balances of $5,000‒$9,999 had more than 90 percent of their assets in equities, only 17.6 percent of those with balances of $250,000 or more did. Furthermore, for IRAs with balances of $5,000 or above, the proportion of them that had less than 10 percent or more than 90 percent in money and bonds combined decreased as the account balance increased.
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Figure 36 IRA Asset Allocation, by Age of Account Owner and Account Balance, 2014 Age/Account Balance Less than 25 Less than $5,000 $5,000‒$9,999 $10,000‒$24,999 $25,000‒$49,999 $50,000‒$99,999 $100,000‒$149,999 $150,000‒$249,999 $250,000 or more Ages 25‒44 Less than $5,000 $5,000‒$9,999 $10,000‒$24,999 $25,000‒$49,999 $50,000‒$99,999 $100,000‒$149,999 $150,000‒$249,999 $250,000 or more Ages 45‒54 Less than $5,000 $5,000‒$9,999 $10,000‒$24,999 $25,000‒$49,999 $50,000‒$99,999 $100,000‒$149,999 $150,000‒$249,999 $250,000 or more Ages 55‒64 Less than $5,000 $5,000‒$9,999 $10,000‒$24,999 $25,000‒$49,999 $50,000‒$99,999 $100,000‒$149,999 $150,000‒$249,999 $250,000 or more Ages 65‒69 Less than $5,000 $5,000‒$9,999 $10,000‒$24,999 $25,000‒$49,999 $50,000‒$99,999 $100,000‒$149,999 $150,000‒$249,999 $250,000 or more
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Balanced Fundsa
Equityb
Bond
Moneyc
Other
30.9% 30.0 26.0 18.0 11.4 6.9 6.5 2.3
36.4% 51.9 56.8 62.0 66.5 64.9 60.8 62.0
1.1% 1.8 2.9 5.3 6.9 11.4 14.3 20.7
28.9% 12.9 10.9 10.3 10.1 10.6 10.5 9.4
2.7% 3.4 3.5 4.4 5.0 6.2 7.9 5.6
19.3 28.5 28.2 25.8 21.2 16.5 14.7 10.6
30.7 49.1 51.9 55.6 60.2 62.8 62.1 63.9
2.0 2.7 3.5 4.4 5.3 6.3 7.5 9.1
46.3 17.2 13.7 11.0 9.3 9.5 9.9 9.1
1.7 2.5 2.7 3.3 3.9 4.9 5.9 7.3
15.4 20.7 20.8 19.4 16.9 14.0 12.7 9.1
41.9 55.6 56.9 58.5 60.6 62.6 62.2 63.8
3.2 4.1 4.9 6.1 7.2 8.0 8.9 10.8
37.8 17.4 14.7 12.6 10.9 10.2 10.2 9.3
1.7 2.2 2.7 3.4 4.3 5.1 5.9 7.1
15.9 20.6 20.5 18.7 16.3 13.9 12.5 8.2
42.2 52.2 53.1 54.2 55.4 57.0 56.3 57.0
4.8 6.3 7.4 9.0 10.5 11.2 12.4 16.1
35.2 18.3 15.8 13.7 12.2 11.1 11.0 10.0
2.0 2.6 3.2 4.4 5.6 6.9 7.7 8.7
6.4 8.3 9.8 11.7 13.5 14.2 15.6 19.2
31.9 18.7 16.4 14.4 12.9 11.7 11.3 10.1
2.5 3.0 4.0 5.5 7.2 8.7 9.7 9.7
14.8 18.7 18.7 17.0 14.9 13.1 11.9 7.7
44.5 51.3 51.1 51.3 51.6 52.3 51.5 53.4 ((cont'd.))
35
Figure 36 (cont'd). Individual Retirement Account (IRA) Asset Allocation, by Age of Account Owner and Account Balance, 2014 Age/Account Balance Ages 70‒74 Less than $5,000 $5,000‒$9,999 $10,000‒$24,999 $25,000‒$49,999 $50,000‒$99,999 $100,000‒$149,999 $150,000‒$249,999 $250,000 or more Ages 75‒84 Less than $5,000 $5,000‒$9,999 $10,000‒$24,999 $25,000‒$49,999 $50,000‒$99,999 $100,000‒$149,999 $150,000‒$249,999 $250,000 or more Ages 85 or older Less than $5,000 $5,000‒$9,999 $10,000‒$24,999 $25,000‒$49,999 $50,000‒$99,999 $100,000‒$149,999 $150,000‒$249,999 $250,000 or more Age Unknown Less than $5,000 $5,000‒$9,999 $10,000‒$24,999 $25,000‒$49,999 $50,000‒$99,999 $100,000‒$149,999 $150,000‒$249,999 $250,000 or more
Balanced Fundsa
Equityb
Bond
Moneyc
Other
14.2 16.8 17.0 15.6 13.6 12.1 11.1 6.9
47.1 52.2 51.6 50.9 50.7 51.4 51.0 53.6
7.6 9.7 11.2 13.1 14.8 15.4 16.6 19.9
28.0 17.8 15.5 13.8 12.3 11.1 10.8 9.8
3.0 3.5 4.7 6.6 8.6 10.0 10.4 9.9
13.1 15.4 16.0 14.8 13.3 11.9 10.9 6.4
45.6 50.6 49.7 49.0 49.6 50.9 51.3 54.6
10.4 12.7 14.1 15.9 16.7 16.9 17.9 20.2
27.1 17.3 14.4 12.3 10.9 10.1 9.8 9.2
3.7 4.1 5.9 7.9 9.5 10.2 10.1 9.7
11.7 14.6 15.5 15.1 13.5 11.6 10.1 6.4
36.7 42.0 43.9 46.0 48.4 50.5 51.3 55.1
17.5 19.7 20.6 20.7 20.2 19.7 20.0 20.1
30.4 19.6 14.7 11.7 10.4 9.8 10.0 8.9
3.6 4.1 5.3 6.5 7.5 8.4 8.6 9.4
17.7 23.0 22.9 17.4 13.7 11.9 11.0 8.9
36.5 44.1 45.9 49.4 50.7 50.2 49.8 52.0
3.7 6.1 9.1 13.0 14.3 15.4 15.7 16.5
40.3 24.1 17.1 12.3 10.1 9.2 9.2 12.2
1.9 2.8 5.0 7.9 11.1 13.2 14.3 10.4
Source: EBRI IRA Database. a Balanced funds include balanced funds, lifecycle/lifestyle funds, and target-date funds b c
Equity includes directly held individual stocks, equity mutual funds, and other 100 percent equity-investment vehicles. Money includes money market mutual funds, money market savings accounts, and certificates of deposit (CDs).
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Figure 37 Percentage of IRAs With Extreme Asset Allocations,a by Various Characteristics, 2014 Less than
More than
Less than
More than
Less than
More than
10% in
90% in
10% in
90% in
10% in
90% in
10% in
90% in
Bonds b &
Bonds b &
Bonds b All 65.6% Type Traditional-Cont. 62.3 Roth 69.6 Traditional-Rlvr 65.6 SEP/SIMPLE 69.0 All Traditional 63.9 Gender of Account Ow ner Female 62.4 Male 65.9 Unknow n 67.6 Age of Account Ow ner Less than 25 72.4 25‒44 71.1 45‒54 70.2 55‒64 64.2 65‒69 59.9 70‒74 58.6 75‒84 57.0 85 or older 55.8 Unknow n 61.1 Account Balance Less than $5,000 86.2 $5,000‒$9,999 70.7 $10,000‒$24,999 66.4 $25,000‒$49,999 62.0 $50,000‒$99,999 58.3 $100,000‒$149,999 56.6 $150,000‒$249,999 53.3 $250,000 or more 47.1
Bonds b 2.1%
Equities c 27.0%
Equities c 27.9%
Money d 73.3%
Money d 14.5%
Money d 41.9%
Money d 17.2%
3.2 1.6 1.5 1.7 2.4
26.2 18.2 34.2 30.0 29.9
27.8 39.3 19.6 26.9 23.9
78.1 80.1 63.0 72.1 71.0
10.1 8.9 23.5 15.9 16.4
43.5 51.6 32.4 43.6 38.2
14.0 10.8 25.5 18.1 19.4
2.6 2.2 1.8
28.0 28.1 25.6
27.5 27.5 28.6
71.1 70.0 77.4
17.4 17.0 10.6
36.7 38.7 47.9
20.5 19.6 13.0
0.6 0.9 1.4 2.2 2.9 3.4 4.7 8.0 2.2
32.1 32.2 26.1 25.0 25.0 24.2 24.3 29.2 32.9
30.0 28.1 32.0 27.9 24.5 24.6 25.5 25.1 19.8
74.9 69.6 73.3 74.2 74.2 75.5 77.5 77.0 72.5
17.7 20.8 15.3 12.9 11.2 9.7 8.3 9.3 14.2
48.4 42.6 45.6 41.5 38.4 38.7 39.2 38.2 37.4
18.5 21.9 17.0 15.6 15.0 14.0 14.1 18.9 17.3
1.6 2.8 2.7 2.5 2.1 1.9 1.7 1.6
63.8 25.6 20.4 17.1 15.0 14.2 13.4 11.3
18.8 38.5 36.5 33.0 29.7 27.5 23.6 17.6
51.6 78.1 79.0 79.5 80.1 80.3 79.4 77.9
43.0 13.0 9.4 6.9 5.3 4.3 3.8 2.5
38.7 50.7 48.1 45.0 42.1 40.8 37.2 30.6
44.9 16.2 12.7 10.0 8.1 6.9 6.2 4.8
So urce: EB RI IRA Database. a Extreme b B o nds
asset allo catio ns refer to almo st no assets (less than 10 percent) o r almo st all assets (mo re than 90 percent) in a particular catego ry.
include the bo nd po rtio n o f the balanced funds, bo nd mutual funds, directly held bo nds, and o ther 100 percent bo nd-investment vehicles.
c Equities
include the equity po rtio n fro m balanced funds. Equity includes directly held individual sto cks, equity mutual funds, and o ther 100 percent-equity investment vehicles. d M o ney includes mo ney market mutual funds, mo ney market savings acco unts, and certificates o f depo sit (CDs).
Discussion The results from this analysis have some important ramifications about the use of IRAs with regard to withdrawal activity and asset allocation. 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 RMD rules.41 In contrast, among individuals under age 60, the highest percentage taking a withdrawal for any age group was 11.4 percent. Consequently, the overwhelmingly majority of the withdrawal activity was among those at retirement ages, mostly at the ages where withdrawals were required. For those at the RMD age, the withdrawal rates at the median appeared close to the amount required to be withdrawn. However, the distribution of the withdrawal rates showed that there were individuals taking assets out at rates that were not likely to be able to provide the same level of income for the remainder of their lives. Furthermore, one-quarter of those age 71 or older were found to have had a withdrawal amount from their Traditional IRA in excess of their RMDs. ebri.org Issue Brief • August 2016 • No. 424
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While the median withdrawal rates in just 2014 found in this study are encouraging in that they suggest many individuals would be able to maintain the IRA as an ongoing source of income throughout retirement, further study is needed to see if these individuals are maintaining those withdrawal rates over longer periods of time. Additionally, the integration of IRA data with data from employment-based defined contribution retirement accounts that is currently underway as part of initiatives associated with EBRI’s Center for Research on Retirement Income (EBRI CRI) will allow for a better picture of what individuals who may have multiple retirement accounts do as they age through retirement. With respect to asset allocation, just over half of all IRA assets were found to be allocated to equities, yet this varied with age, account balance, and IRA type in ways that appeared appropriate. Those older, on average, had lower allocations to equities. Furthermore, individuals with the largest balances had the lowest combined exposure to equities (including the equity share of balanced funds to the pure equity funds). However, when looking at the allocations on an account basis, a significant percentage of accounts had allocations that were “extreme”—less than 10 percent or more 90 percent in a particular asset type. This occurred across all ages and account balances. Consequently, there is room for improvement in allocation behavior of IRA owners to reach a better diversification of assets.
Conclusion This study provided results for the sixth year (2014) of data available from the EBRI IRA Database, with the last five years being contiguous. The results show 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 he or she has by the aggregation of their multiple accounts. Indeed, the overall, cumulative IRA average balance was 27 percent larger than the unique IRA account balance. Therefore, databases that are not able to link accounts owned by the same individual within and across data providers will likely understate the total IRA assets owned by that individual, and thus the total retirement accumulations held by individuals. In addition, this study includes notable findings on withdrawal activity and asset allocation. In particular, the median withdrawal percentages from Traditional IRAs by those IRA owners age 71 or older are in the 4-to-6-percentage point range with three-fourths of these IRA owners taking an amount equal to their RMD. Furthermore, one-quarter of IRA owners ages 65 or older have more than 90 percent of their IRA assets allocated to equities. Consequently, the withdrawal amounts of those taking more than the RMD could have important policy implications, while the sizable percentage of IRA owners with extreme allocations shows that more attention is likely needed in regards to allocation decisions. This study is the first in a series on results from the EBRI IRA Database using the 2014 data. A longitudinal analysis on balances, contributions, withdrawals, and asset allocation for the period from 2010‒2014 is forthcoming. This will provide evidence on the direction of IRA behaviors that have taken place recently, including the change in average balances, contribution persistence, consistency in withdrawal amounts, and any rebalancing in the allocation of the IRA assets.
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About IRAs Individual retirement accounts (IRAs) were created by the Employee Retirement Income Security Act of 1974 (ERISA) as a way to provide workers who did not have employment-based pensions an opportunity to save for retirement on a tax-deferred basis. The Economic Recovery Tax Act of 1981 (ERTA) extended the availability of IRAs to all workers with earned income, including those with pension coverage. The Tax Reform Act of 1986 (TRA ’86) restricted the tax deductibility of IRA contributions to those with incomes below certain levels and created nondeductible IRAs (where contributions are not tax-deductible but earnings still accrue tax-deferred), and partially (or wholly) deductible IRAs, depending on income. The Taxpayer’s Relief Act of 1997 (TRA ’97) created a new type of nondeductible IRA—the Roth IRA—and allowed nonworking spouses to contribute to an IRA, subject to certain income restrictions. As an account type, IRAs currently hold the largest single share of U.S. retirement plan assets, largely from rollovers from other types of plans (see Box Figure A). Nonemployment-based IRAs. There are two basic types:
• Traditional IRAs: Anyone with earned income, as well as a nonearning spouse of an earner under certain conditions, can contribute. Contributions are tax deductible (or not) depending upon the contributor’s income and participation in an employment-based retirement plan. Earnings in these IRAs accrue tax-deferred, and withdrawals after age 59-½ are taxed as ordinary income. Minimum withdrawals from a traditional IRA must commence by April 1 of the calendar year after the year the individual turns age 70-½. • Roth IRAs: This type of IRA offers tax-free investing for retirement: No taxes are paid on investment returns or on withdrawals made after age 59-½, as long as the Roth IRA has been held for at least five years. Contributions to Roth IRAs are not tax-deductible, but there are no mandatory withdrawals after age 70-½ (as there are with traditional IRAs). Certain income limits restrict eligibility for contributing to a Roth IRA. (Traditional IRAs can be converted to Roth IRAs through paying the applicable taxes.) The current, maximum, annual contribution to a Traditional or Roth IRA is $5,500 for those under age 50 at the end of 2016. This limit can be split between a Traditional and a Roth IRA, but the combined limit is $5,500. Those age 50 or older in 2016 can make an additional $1,000 “catch-up” contribution, for a combined annual limit of $6,500. The maximum contribution to a Roth IRA and the maximum deductible contribution to a Traditional IRA may be reduced depending upon an individual’s modified, adjusted gross income. Employment-based IRAs.
• Simplified Employee Pension (SEP) plans allow employers to make contributions on a tax-deferred basis for their employees and allow self-employed individuals to make contributions for their own retirement. • Savings Incentive Match Plans for Employees (SIMPLE) plans also allow for tax-deferred, employer contributions plus allow salary-reduction contributions by the employees. The employers must make matching contributions or nonelective contributions to the plans. Traditional–originating from rollovers (TOFR) IRAs or Traditional—originating from contributions (TOFC) IRAs: In the EBRI IRA Database, Traditional IRAs are separated into two categories to highlight the amount of IRA assets that have moved from other tax-qualified plans (including defined benefit (DB), defined contribution (DC), and prior IRA plans) and were subsequently rolled over to new IRAs―those originating from rollovers and those originating from contributions. However, this in no instance should be construed as an estimate of the dollars originating in the employment-based system and transferred to the IRA system, as both types of accounts could have received rollovers or contributions subsequent to their establishment. Additionally, a rollover could have been an IRA-to-IRA rollover without any money originating in the employment-based system. This distinction is important for those interested in seeing the relative contribution of the employment-based retirement system vs. that funded solely by IRA contributions. As the longitudinal aspect of this database is developed, a more refined measure of these dollars will be established. The Internal Revenue Service reports these accounts as a single category called Traditional IRAs. The tax treatment is the same for these IRAs once the dollars are in the IRA.
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Endnotes 1
See Figure A for the distribution of retirement plan assets.
Figure A Sources of Estimated Total U.S. Retirement Plan Assets, 2014 (Total = $28.1 Trillion)
Federal Government 13%
State & Local Government 20%
Private Defined Benefit 11%
Private Defined Contribution (including 401(k)s) 19%
Private Insured 10% Individual Retirement Accounts 27%
Source: Board of Governors of the Federal Reserve System, "Financial Accounts of the United States: Flow of Funds, Balance Sheets, and Integrated Macroeconomic Accounts." Third Quarter 2015.
2
See Craig Copeland, “Individual Retirement Account Balances, Contributions, and Rollovers, 2013; With Longitudinal Results 2010–2013: The EBRI IRA Database,” EBRI Issue Brief, no. 414 (Employee Benefit Research Institute, May 2015) for the most recent prior year of the database. 3
See Craig Copeland, “IRA Withdrawals in 2013 and Longitudinal Results 2010—2013,” EBRI Notes, Vol. 36 No. 7 (Employee Benefit Research Institute, July 2015): 2–13 for most recent prior examination of withdrawal activity by the IRA owners within the EBRI IRA Database.
4
See Craig Copeland, “IRA Asset Allocation” EBRI Notes, Vol. 33, No. 5 (Employee Benefit Research Institute, May 2011): 2– 14; Craig Copeland, “IRA Asset Allocation, 2010;” EBRI Notes, Vol. 33, no. 10 (Employee Benefit Research Institute, October 2012): 8–20; Craig Copeland, “IRA Asset Allocation, 2011” EBRI Notes, Vol. 32, no. 10 (Employee Benefit Research Institute, October 2013): 8–22; Craig Copeland, “IRA Asset Allocation, 2012, and Longitudinal Results, 2010–2012” EBRI Notes, Vol. 35, no. 10 (Employee Benefit Research Institute, October 2014): 8–26; and Craig Copeland, “IRA Asset Allocation, 2013, and Longitudinal Results, 2010–2013” EBRI Notes, Vol. 36, no. 9 (Employee Benefit Research Institute, September 2015): 10–27 for prior results on asset allocation from the database. 5
Below is a comparison of the EBRI IRA Database with numbers from the Internal Revenue Service and the Federal Reserve’s
Financial Accounts report as referenced in Figure A.
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EBRI IRA Database 2010
EBRI IRA Database 2014
Internal Revenue Service 2010 Data
Flow of Funds 2014 Data
$1.00 trillion
$2.69 trillion
$5.03 trillion
$7.44 trillion
85.9%
85.2%
86.3%
Average Rollover Amount
$69,012
$88,866
$68,123
Average Account Balance
$89,427
$127,583
$92,404
Total Assets Percentage Traditional Assets
The above percentage of Traditional assets is adjusted for known assets. With the unknown assets included, the Traditional IRA asset percentage is 82.5 percent. Based on this asset comparison, the database includes about 35 percent of the 2014 assets. The number of individuals owning IRAs in the database (21.1 million) represents about one-third of all IRA owners, accounting for growth from the 54.5 million individuals the Internal Revenue Service reported owning an IRA in 2010. See Victoria L. Bryant and Jon Gober, “Accumulation and Distribution of Individual Account Arrangements, 2010.” Statistics of Income Bulletin, Fall 2013, pp. 1-18 for complete IRS tabs of IRAs. Also see the discussion in the About IRAs box about the differences in IRA types. 6
Traditional IRAs are broken down into categories based on how the accounts originated with the data providers either through contributions made by the account owners or through rollovers from other tax-qualified vehicles, such as Traditional pension or 401(k) plans. Since both of these account categories could have received contributions or rollovers at some point after their origination, these are not proxies for employment-based dollars vs. IRA-only dollars. The TOFR IRAs do provide an estimate of the dollars that have been moved into new IRAs. 7
Some of the IRAs could not be classified into the four stated categories by the data providers. Consequently, these accounts are classified as “unknown” in the EBRI IRA database. 8
For those with a known account, 36.2 percent were TOFC IRAs, 32.0 percent TOFR IRAs (combined 68.2 percent), 24.8 percent Roth, and 7.0 percent SEP/SIMPLE. 9
The percentages of IRA types owned on an individual basis sums up to more than 100 percent, because some individuals own more than one type of IRA.
10
The percentage of individuals owning IRAs in the unknown category having these lower balances was significantly larger at 68.3 percent, as the next highest category with these lower balances is SEP/SIMPLE-IRA owners who had 43.0 percent with a balance below $25,000. 11
This isn’t surprising considering that Roth IRAs didn’t exist until 1998. Furthermore, Roth IRAs have a higher percentage of younger contributors who, on average, contribute lower amounts annually. Additionally, Roth IRAs have generally not received large rollovers from other tax-qualified plans, such as 401(k) plans, as Traditional rollover IRAs have. However, this could change over time with the growing availability of a Roth option in 401(k) plans and changes in tax laws that allow for more ease in converting Traditional IRAs into Roth IRAs.
12
The individual account-balance distribution could shift toward a larger percentage of individuals having balances greater than $100,000 in the future as the database expands to include other data providers. However, this will depend on the number of new individuals added relative to the number of new accounts added for individuals already in the database.
13
In 2010, the ability of individuals to convert their Traditional IRAs to Roth IRAs was significantly eased. As a result, after 2010, the differences in the average balances between TOFR, TOFC, and Roth IRAs could become smaller, depending on the number of individuals taking advantage of these new Roth-conversion rules. 14
TOFR IRAs and those of unknown type, where owner age was unknown, had significantly higher average balances than those of all other ages for those IRA types. This reflects a specific segment of the market for which some of the data administrators do not have age records. The likelihood of having more than one IRA was also much higher among this group with an unknown age.
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15
Contributions to SEP and SIMPLE IRAs are not considered in this section due to the differing limits in them relative to the nonemployment-based IRAs and the potential incentives to contribute to SIMPLEs through matching contributions. 16
This section only includes actual new contributions to IRAs. It does not include rollovers or conversions to Roth IRAs. Rollovers are examined in the next section. The Roth conversion data in the database has not been verified. When it has, conversions will be included in a future publication.
17
In 2014, the maximum contribution to an IRA was $5,500 for those younger than age 50 and $6,500 for those ages 50 or older, due to the additional $1,000 catch-up contribution allowed for individuals of that age.
18
In 2001, 69.9 percent of those making a contribution to a deductible, Traditional IRA made the maximum contribution ($2,000), but in 2005, only 26.8 percent were found to have made the maximum contribution ($4,000 for those under age 50 and $4,500 for those ages 50 or older) to this IRA type. See Craig Copeland, ”Ownership of Individual Retirement Accounts and 401(k)-Type Plans,” EBRI Notes, Vol. 29, no. 5 (Employee Benefit Research Institute, May 2008): 2–12. In 2012, when the limits were $5,000 and $6,000, 51.9 percent of accounts received the maximum contribution and 53.5 percent of individuals made the maximum contribution according to the IRA database, see Craig Copeland, “Individual Retirement Account Balances, Contributions, and Rollovers, 2012; With Longitudinal Results 2010–2012: The EBRI IRA Database,” EBRI Issue Brief, no. 399 (Employee Benefit Research Institute, May 2014). 19
The percentage of individuals making the maximum contribution could be higher if individuals are contributing to more than one account and the other account(s) is (are) not in the database. However, within the database, of those contributing to a Roth IRA in 2014, only 4.6 percent also contributed to a Traditional IRA. Of those contributing to a Traditional IRA, only 6.5 percent contributed to a Roth IRA. Furthermore, 97.2 percent of those contributing to either a Traditional or Roth IRA in 2014 contributed to only that IRA. Thus, virtually all of those contributing to an IRA contribute to only one account.
20
For those IRA owners without an identified gender, the likelihood of contributing to the IRA was higher—13.8 percent compared with 10.0 percent and 10.1 percent, respectively, for females and males. 21
While those accounts owned by individuals with an unspecified gender in the database had a larger overall likelihood of receiving contributions than that of those with a known gender, there is nothing to indicate that the accounts owned by those without a specified gender were more likely to actually be owned by a male or a female.
22
This held true for Traditional IRAs, but not for Roth IRAs. The continuous increase with age of the average contribution for Roth IRAs didn’t start until age 40 and older.
23
Rollovers in the database include any dollars moved into an IRA from another tax-qualified plan, including defined contribution plans, defined benefit plans, or other IRAs (excluding any conversions from Traditional to Roth IRAs). 24
Individuals could own both types of IRAs leading to a higher than 100 percent ownership when added.
25
The remaining 1.3 percent of the individuals had an unknown age.
26
Bryant and Gober (2013) (see endnote 5) reported that 13.4 million taxpayers had withdrawals from a Traditional or Roth IRA that totaled $243.9 billion in 2010. Of these taxpayers, 13.3 million (99.3 percent) withdrew from a Traditional IRA in an amount totaling $243.3 billion, and 0.1 million (0.7 percent) made a withdrawal from a Roth IRA, totaling $0.6 billion. This number of individuals withdrawing from a Traditional IRA is 30.9 percent of the taxpayers with a Traditional account at the end of the year in 2010, compared with 0.7 percent for Roth IRAs. Some of the data administrators supplying data to the database did not provide information for individuals with a zero balance at year-end, whereas the IRS data included withdrawals for taxpayers that depleted their accounts during the year.
27
Beginning in the year individuals turn age 70-½, owners of tax-qualified plans/accounts (e.g., 401(k)-type plans, Traditional IRAs) are required to make an annual minimum distribution (withdrawal). The required minimum distribution (RMD) is calculated by the end of the prior-year balance divided by the longevity factor published by the IRS. For those with more than one IRA, the required minimum distribution does not have to be taken from each account but can be taken from only one account as long the total minimum amount withdrawn from that one account equals the total that must be taken for all the accounts combined. Consequently, in this study of IRAs, not all Traditional IRA owners over 70 years of age had a withdrawal. Owners of Roth IRAs are not required to take a distribution. For more information, see the IRS Publication 590, online at https://www.irs.gov/pub/irs-pdf/p590b. ebri.org Issue Brief • August 2016 • No. 424
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28
Age 71 is used as a cutoff, since this is the minimum whole age where the required minimum distribution rules are in effect for everyone of that age.
29
The balances were the end-of-year amounts in the accounts, so they were after the withdrawals occurred.
30
Some of this trend was due to older IRA owners being far more likely to have larger accounts, particularly among the largest accounts. 31
Withdrawals in the database for 2014 amounted to $92.8 billion.
32
As will be shown in the next section, while the amount is much higher for males, the percentage of the account balance taken out between the two genders is very close to equal.
33
The withdrawal rate in this study is calculated by (withdrawal amount)/(year-end account balance + withdrawal amount) and is presented in percentage terms.
34
Since the remaining life expectancy of individuals decreases as they get older, the required minimum distribution amount increases, leading to higher withdrawal rates as individuals age.
35
The number of IRAs in the database with complete asset-allocation data was 21.5 million accounts with $2.27 trillion in assets. However, the distributions between the overall database and the portion with complete asset allocation by age and gender of the owner and the account balance and type are very similar. See Figure B for a comparison of these distributions.
Figure B Distribution of Individual Retirement Accounts (IRAs), by Asset Allocation Data and Various Characteristics, 2014
All Gender of Account Ow ner Female Male Unknow n Age of Account Ow ner Less than 25 25-44 45-54 55-64 65-69 70-74 75-84 85 or older Unknow n All
All Accounts 100.0%
Complete Asset Allocation 100.0%
24.7 30.5 44.8
27.7 33.3 39.0
1.2 22.4 21.5 25.9 11.7 7.2 6.9 1.9 1.3 100.0%
1.1 22.5 21.7 25.9 11.4 7.5 7.0 1.8 1.2 100.0%
Account Balance Less than $5,000 $5,000-$9,999 $10,000-$24,999 $25,000-$49,999 $50,000-$99,999 $100,000-$149,999 $150,000-$249,999 $250,000 or more Type* Traditional-Cont. Roth Traditional-Rlvr SEP/SIMPLE All Traditional
All Accounts
Complete Asset Allocation
23.1 10.4 16.6 13.9 13.3 6.6 6.5 9.7
20.2 10.1 17.1 14.6 14.1 7.0 6.8 10.0
37.6 24.7 30.9 6.8 68.5
38.1 25.0 30.5 6.8 68.6
So urce: EB RI IRA Database.
36
These percentages are asset weighted. The remaining results will all be asset weighted until the section on “extreme allocations,” which is account weighted.
37
The one government data source, the Survey of Consumer Finances (SCF), which has significant detail of all U.S. families’ wealth, including IRA and defined contribution plan wealth, only reports an allocation between equity and interest-bearing assets. As this database shows, there is a significant amount of assets in balanced funds and other assets that are not strictly equities or interest bearing but are being represented as such in the data. See Craig Copeland, “Retirement Plan Participation and Asset Allocation, 2010,” EBRI Notes, Vol. 34, no. 4 (Employee Benefit Research Institute, April 2013): 9−18 for results on asset allocation from the survey; and Jesse Bricker et al. “Changes in U.S. Family Finances from 2010 to 2013: Evidence from the Survey of Consumer Finances,” Federal Reserve Bulletin, Vol. 100, no. 4 (September 2014): 1–41 www.federalreserve.gov/pubs/bulletin/2014/pdf/scf14.pdf (last reviewed April 2016) for more information on the Survey of Consumer Finances.
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38
The total equity allocation is estimated by assuming that all balanced funds have 60 percent in equities and 40 percent in bonds. However, target date funds are included in the balanced funds, so while this estimation methodology is not likely to hold across ages, on an overall basis it remains a workable indicator of the average allocation between the two asset classes.
39
The allocations to bonds and equities include the portion of balanced funds that come from each asset type. The assumed percentage, like above, is that 60 percent of the balanced assets are from equities and 40 percent are from bonds.
40
In this section, the distribution is account weighted, so that the allocation of each account is weighted the same. The full distribution of the account allocations to equities, bonds, and money are included as an online appendix at http://bit.ly/EBRIIB-424_Appndx 41
As mentioned in endnote 27, individuals age 70-½ or older do not have to take a withdrawal from every Traditional IRA they own in which they have assets, but only an amount that satisfies the required minimum distribution. Therefore, individuals could take all their distribution out of one account and leave another one they own untouched. This is why not all individuals over this age have a withdrawal, as not all of an individual’s accounts are necessarily included in this database.
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The Employee Benefit Research Institute (EBRI) was founded in 1978. Its mission is to contribute to, to encourage, and to enhance the development of sound employee benefit programs and sound public policy through objective research and education. EBRI is the only private, nonprofit, nonpartisan, Washington, DC-based organization committed exclusively to public policy research and education on economic security and employee benefit issues. EBRI’s membership includes a cross-section of pension funds; businesses; trade associations; labor unions; health care providers and insurers; government organizations; and service firms. EBRI’s work advances knowledge and understanding of employee benefits and their importance to the nation’s economy among policymakers, the news media, and the public. It does this by conducting and publishing policy research, analysis, and special reports on employee benefit issues; holding educational briefings for EBRI members, congressional and federal agency staff, and the news media; and sponsoring public opinion surveys on employee benefit issues. EBRI’s Education and Research Fund (EBRI-ERF) performs the charitable, educational, and scientific functions of the Institute. EBRI-ERF is a tax-exempt organization supported by contributions and grants. EBRI Issue Briefs is a serial with in-depth evaluation of employee benefit issues and trends, as well as critical analyses of employee benefit policies and proposals. EBRI Notes is a serial providing current information on a variety of employee benefit topics. EBRIef is a weekly roundup of EBRI research and insights, as well as updates on surveys, studies, litigation, legislation and regulation affecting employee benefit plans, while EBRI’s Blog supplements our regular publications, offering commentary on questions received from news reporters, policymakers, and others. The EBRI Databook on Employee Benefits is a statistical reference work on employee benefit programs and work force-related issues. Contact EBRI Publications, (202) 659-0670; fax publication orders to (202) 775-6312. Subscriptions to EBRI Issue Briefs are included as part of EBRI membership, or as part of a $199 annual subscription to EBRI Notes and EBRI Issue Briefs. Change of Address: EBRI, 1100 13th St. NW, Suite 878, Washington, DC, 20005-4051, (202) 659-0670; fax number, (202) 775-6312; e-mail:
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