Rollovers into traditional IRAs occur evenly across all age groups and play a significant role in the growth of IRA assets, according to research by the Investment Company Institute and the Securities Industry and Financial Markets Association.

Each five-year age band from the 30-34 age group up to the 60-64 age group accounts for 10% to 13% of rollover occurrences. This relatively equal distribution reflects that rollovers occur across the full working career, not just at retirement, the ICI and SIFMA said.

Of traditional IRA investors, 12.3% rolled over money in 2007, and 11.3% did so in 2008. Further, half of households owning traditional IRAs have conducted a rollover at some point in time.

“Americans’ retirement nest eggs are benefiting from the Employee Retirement Income Security Act provision that permits workers to roll over employer-sponsored retirement plan accruals into traditional IRAs upon job separation,” says Sarah Holden, senior director of retirement and investor research at the ICI.

“The IRA Investor Database, which uses a comprehensive sample of account-level data, provides new understanding of such rollover activity and the range of IRA investors who make rollovers,” Holden adds.

The research also found that nearly two-thirds of traditional IRA investors opened their accounts with rollovers, with the majority being younger investors. Nearly 86% of traditional IRA investors between the ages of 25 and 29 in 2007 opened their accounts with rollovers.

IRA investments totaled $4.2 trillion at the end of the second quarter of 2010, representing more than 25% of total U.S. retirement market assets and nearly 10% of U.S. households’ total financial assets.

In 2007, rollovers accounted for $323.1 billion in inflows to traditional IRAs, while contributions were $14.4 billion. In short, the ICI and SIFMA said, rollovers have played a significant role in boosting the aggregate level of assets in traditional IRAs.


Barney is the editor of Money Management Executive, a SourceMedia publication.Follow EBN on: Twitter | Facebook | LinkedIn | Podcasts

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