A History of Wealth Accumulation
For more than 35 years, Individual Retirement Accounts, IRAs, have provided Americans the opportunity to accumulate and manage their retirement wealth in a tax deferred environment. IRAs can be funded with contributions from an investor or can be established with a ‘rollover" from another retirement plan. There are different classes of IRAs such as a Traditional IRA, a Roth IRA, and SIMPLE IRA.
IRAs were created with the enactment of the Employee Retirement Income Security Act in 1974 ("ERISA"). IRAs were originally conceived as accounts Americans could voluntarily contribute funds to on an annual basis. Congress wanted Americans to increase their annual savings for retirement.
IRAs are also able to accept rollovers from qualified retirement plans such as Keogh, 401k, 457, and 403(b) accounts. Rollover IRAs traditionally make up the largest dollar volume of IRA accounts simply because qualified retirement plans have traditionally allowed higher annual contributions than traditional IRAs.
On 9/23/08 the Employee Benefit Research Institute reported there was approximately $4.75 Trillion in IRAs. The value of IRA accounts is truly amazing when compared to the value of all Defined Benefit Plans ($2.3 trillion), and the value of all Defined Contribution Plans ($3.49 trillion), also reported by the Employee Benefit Research Institute on 9/23/08. For more information visit www.ebri.org.
It is also important to understand that based on the aging of the Baby Boomers, potential IRA rollover funds will increase dramatically. Eligible IRA rollover dollars are expected to increase 10 – 12% annually through 2012 as reported in Investment Advisor Magazine, 10/2007. |
