In 1974, Congress established individual retirement accounts (IRAs) for people to save for the future with tax-advantaged savings plans. An article on FoxBusiness.com features the results of a recent study, which indicates “most of the $7.8 Trillion parked inside of IRAs came from rollovers of employer-sponsored 401(k) accounts.”
One of the intents in creating the IRA was for people to take their own initiative in saving for retirement, but with employer-sponsored plans being more commonplace, are people now too reliant on their work retirement accounts to save for the future?
The study found that a main use of IRAs today is “as a receptacle for transfers” and people, who might benefit from IRAs, were not actively saving in them. The most recent data available to researchers put the number of people actively saving to IRAs as low as 14 percent.
While employer-based plans can offer ease-of-use, it’s also possible that many plans could restrict the number and type of investments within the plan.
An IRA or other qualified retirement plan can allow a full-range of assets beyond the market (such as real estate). The flexibility to invest in alternatives might be a benefit to some people, and could encourage them to more actively save and use IRAs for their retirement.
Find out more about what you can do with an IRA – schedule a free consultation with an Equity Trust Senior Account Executive