IWS Documented News Service
_______________________________
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
________________________________________________________________________
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Employee Benefit Research Institute (EBRI)
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EBRI Issue Brief 375
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Individual Account Retirement Plans: An Analysis of the 2010 Survey of Consumer Finances [26 September 2012]
http://www.ebri.org/publications/ib/index.cfm?fa=ibDisp&content_id=5112
or
http://www.ebri.org/pdf/briefspdf/EBRI_IB_09-2012_No375_IndvAccts.pdf
[full-text, 28 pages]
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Press Release 26 September 2012
Ownership in 401(k) Plans Continues to Grow, While IRA Ownership Falls
http://www.ebri.org/pdf/PR989.26Sept12.IAs.pdf
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WASHINGTON?Although fewer American families are participating in a retirement plan at work, more
of those with a plan are in a 401(k). At the same time, ownership of individual retirement accounts (IRAs)
is falling, according to a new report by the nonpartisan Employee Benefit Research Institute (EBRI).
Analyzing the four-year period from 2007?2010, EBRI finds that the share of American families with a
member in any employment-based retirement plan from a current employer increased steadily from
38.8 percent in 1992 to 40.6 percent in 2007, before declining in 2010 to 37.9 percent.
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Ownership of 401(k)-type plans among families participating in a retirement plan more than doubled from
31.6 percent in 1992 to 79.5 percent in 2007, and increased again in 2010 to 82.1 percent. But the
percentage of families owning an IRA or Keogh retirement plan (for the self-employed) declined from
30.6 percent in 2007 to 28.0 percent in 2010. In addition, the percentage of families with a retirement plan
from a current employer, a previous employer's defined contribution plan, or an IRA/Keogh declined
from 66.2 percent in 2007 to 63.8 percent in 2010.
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As in the past, EBRI found that retirement plan assets account for a growing majority of most Americans'
financial wealth, outside the value of their home. The median (mid-point) percentage of families' total
financial assets comprised by defined contribution plan assets and/or IRA/Keogh assets (assuming the
family had any) increased from 2007 to 2010, and accounted for a clear majority of these assets:
? Defined contribution plan balances accounted for 58.1 percent of families' total financial assets in
2007, and that share grew to 61.4 percent in 2010.
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? Defined contribution and/or IRA/Keogh balances increased their share as well, from 64.1 percent
of total family financial assets in 2007 to 65.7 percent in 2010. Across all demographic groups,
these assets account for a very large share of total financial assets for those who own these
accounts.
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However, the EBRI report notes that the most recent data, along with other EBRI research, indicate that
many people are unlikely to afford a comfortable retirement. "Americans lost a tremendous amount of
wealth between 2007 and 2010, and the percentage of families that participated in an employment-based
retirement plan and/or owned an IRA decreased as well," said Craig Copeland, EBRI senior research
associated and author of the report.
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However, he added, the percentage of family heads who were eligible to participate in a defined
contribution plan and actually did so remained virtually unchanged during this time. Therefore, despite all
the bad news that resulted from this period, one positive factor should be noted: "Those eligible to
participate in a retirement plan continued to participate?which may help change the likelihood of a lower
retirement standard for many Americans," Copeland said.
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The report is based on the most recent data from the Survey of Consumer Finances (SCF), the Federal
Reserve Board's triennial survey of wealth. The full report is published in the September EBRI Issue
Brief, "Individual Account Retirement Plans: An Analysis of the 2010 Survey of Consumer Finances,"
available online at www.ebri.org
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Concerning IRAs, the EBRI report once again quantifies the degree to which IRA assets are rolled over
from employment-based retirement plans (such as defined benefit pensions or defined contribution
401(k)-type plans), and do not come from new contributions. While regular IRAs account for the largest
percentage of IRA ownership, rollover IRAs had a larger share of assets than regular IRAs in 2010.
Specifically, among total IRA assets, rollover IRAs account for 44.5 percent of assets, regular IRAs 44.1
percent, and Roth IRAs 11.4 percent. Therefore, rollover IRAs account for a larger share of assets than
regular IRAs, while the two together account for just under 90 percent of the IRA assets.
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The report notes that tracking individual-account retirement plans such as 401(k)s and IRAs is important
because traditional defined benefit pension plans have long been declining in the private sector, while
defined contribution retirement plans have increased?a trend that makes it ever-more important for most
private-sector workers to build their retirement wealth through individual-account savings plans.
Consequently, the amount of assets accumulated in these accounts provides an indication of how
prepared?or unprepared?most workers' finances will be to supplement the Social Security benefits they
will receive in retirement.
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The Employee Benefit Research Institute is a private, nonpartisan, nonprofit research institute based in
Washington, DC, that focuses on health, savings, retirement, and economic security issues. EBRI does
not lobby and does not take policy positions. The work of EBRI is made possible by funding from its
members and sponsors, which includes a broad range of public, private, for-profit and nonprofit
organizations. For more information go to www.ebri.org or www.asec.org
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________________________________________________________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
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Source: http://iwsdocumentednewsdaily.blogspot.com/2012/09/iws-ebri-individual-account-retirement.html
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