A monthly research report from the EBRI Education and Research Fund 2014 Employee Benefit Research Institute

November 2014 No. 406

Individual Account Retirement Plans: An Analysis of the 2013 Survey of Consumer Finances By Craig Copeland, Ph.D., Employee Benefit Research Institute

A T A G L A N C E

The percentage of all families with an employment-based retirement plan from a current employer decreased from 38.8 percent in 1992 to 36.2 percent in 2013, according to the most recent data from the 2013 Survey of Consumer Finances (SCF), the Federal Reserve Boards triennial survey of wealth.

While retirement plan ownership from a current employer among families declined from 20102013, the percentage of family heads who were eligible for defined contribution (DC) plans and chose to participate held essentially stable at 78.2 percent in 2010 to 78.7 percent in 2013.

The percentage of families owning individual retirement accounts (IRAs) or Keoghs was also unchanged from 2010 (28.0 percent) to 2013 (28.1 percent). Furthermore, the percentage of families with an individual account retirement plan from a current employer or a previous employer or an IRA/Keogh declined from 50.4 percent in 2010 to 48.2 percent in 2013. However, when including defined benefit (pension) retirement plans, the percentage with any retirement plan was unchanged from 63.8 percent in 2010 to 63.5 percent in 2013.

While ownership of employment-based plans and IRAs was unchanged to declining in 2013, the median (mid-point) account balance of those families owning an individual account retirement plan increased in 2013: The value was $22,992 in 1992, reached $38,608 in 2001, and increased to $59,000 in 2013.

Individual account retirement plan assets were a clear majority of families total financial assets (among those owning such plans): 70.3 percent in 2013 at the median, unchanged from 2010. Across all demographic groups in 2013, these assets share at the median of total financial assets was at least 49.2 percent (when these accounts were owned).

By IRA type, regular IRAs accounted for the largest percentage of IRA ownership, but rollover IRAs had a slightly larger share of assets than regular IRAs in 2013.

The increase in IRA wealth is expected to continue in the future, as more workers will be in defined contribution plans and will be in them for a longer period of their working lives than in the past (since defined contribution plans did not become dominant until the 1990s).

While the results of this study do not answer questions about what is needed for retirement, they show the continued growing importance of individual account retirement plans. Consequently, any policy that alters this system could have consequenceseither positive or negativefor Americans ability to fund a comfortable retirement.

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Craig Copeland is a senior research associate at the Employee Benefit Research Institute (EBRI). This Issue Brief was written with assistance from the Institutes 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, 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, Individual Account Retirement Plans: An Analysis of the 2013 Survey of Consumer Finances, EBRI Issue Brief, no. 406, November 2014.

Report availability: This report is available on the Internet at www.ebri.org

Table of Contents Introduction .......................................................................................................................................................... 4

Trends in Individual Account Retirement Plan Ownership .......................................................................................... 5

Employment-Based Retirement Plan from Current Employer ................................................................................. 6Defined Contribution Plan Participation Rates of Family Heads .............................................................................. 6IRA/Keogh Ownership ........................................................................................................................................ 6Retirement Plans from Any Source ...................................................................................................................... 8

Individual Account Retirement Plan Balances ........................................................................................................... 9

Average Values .................................................................................................................................................. 9Median Values ................................................................................................................................................. 12Percentage of Financial Assets from Individual Account Retirement Plans ............................................................. 12Distribution of Individual Account Retirement Plan Assets ................................................................................... 14Distribution of IRA Types and Assets ................................................................................................................. 15

Conclusion .......................................................................................................................................................... 16

References .......................................................................................................................................................... 21

Endnotes ............................................................................................................................................................ 23

Figures Figure 1, U.S. Private Sector Retirement Plan and IRA Assets, 19962013 ................................................................. 4

Figure 2, Percentage of all Families With an Employment-Based Retirement Plan From a Current Employer, by Various Demographic Categories, 1992, 2010, and 2013 .......................................................................................... 7

Figure 3, Participation Rates of Family Heads Eligible for an Employment-Based Defined Contribution Plan, 1995, 2001, 2007, 2010, and 2013 ............................................................................................................................... 8

Figure 4, Percentage of Families With an IRA/Keogh, by Various Demographic Categories, 1992, 2001, 2007, 2010, and 2013 ........................................................................................................................................................ 9

Figure 5, Percentage of all Families With a Retirement Plan From a Current or Previous Employer or an IRA/KEOGH Plan, 2001, 2007, 2010, and 2013 ............................................................................................................ 10

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Figure 6, Average Family IRA, Defined Contribution Plan, and Combined Balances for Those Families Owning These Accounts, by Various Demographic Categories, 1992, 2001, 2010, and 2013 ............................................... 11

Figure 7, Median Family IRA, Defined Contribution Plan, and Combined Balances for Those Families Owning These Accounts, by Various Demographic Categories, 1992, 2001, 2010, and 2013 ............................................... 13

Figure 8, Median Percentage of Financial Assets in Employment-Based Defined Contribution Plans and IRAs/Keoghs for Families With these Assets, by Various Categories, 1992, 2001, 2007, 2010, and 2013 ................................ 14

Figure 9, Distribution of Families' Individual Account Plan Assets, by Various Categories, 2013 .................................. 15

Figure 10, Percentage of Families' IRA Ownership, by IRA Type or Combination of IRA Types, 2013 .......................... 18

Figure 11, Percentage of IRA Assets Owned by Families, by IRA Type or Combination of IRA Types, 2013 ................. 18

Figure 12, Percentage of Total IRA and Keogh Assets, by Keogh and IRA Type, 2013 ............................................... 19

Figure 13, Percentage of Total IRA Assets, by IRA Type, 2013 ................................................................................ 19

Figure 14, Distribution of Families' Individual Retirement Account (IRA) Assets, by Various Categories, 2013 ............. 20

Figure 15, Median and Average Net Worth and Home Ownership for Families With and Without an Individual Account (IA) Retirement Plan, by Family Income and Family Head Age, 2013 .......................................................... 20

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Individual Account Retirement Plans: An Analysis of the 2013 Survey of Consumer Finances By Craig Copeland, Ph.D., Employee Benefit Research Institute

Introduction Individual account (IA) retirement plans continue to grow in importance as a source of retirement income for future retirees in both the public and private sectors. IA plans include employment-based retirement savings plans financed by employer contributions and workers own contributions (most notably, defined contributi