Total assets in individual retirement accounts (IRAs) declined for the third
straight year in 2002, to a level nearly 12 percent below their 1999 peak, according
to a new report from the Employee Benefit Research Institute (EBRI).
The study, published in the February 2004 EBRI Notes, also found that the number
of Americans making deductible contributions to IRAs has dropped steadily since
By contrast, the number contributing annually to Keogh accounts, which offer
tax-sheltered retirement savings for the self-employed, has grown steadily.
The number of such contributions rose by more than 50 percent between 1990 and
2001 and more than $13 billion was deposited to such accounts in 2001. Taxpayers
deposited an added $7.4 billion in deductible contributions to IRA accounts
At the start of the period, IRA contributions outnumbered Keoghs by more than
six to one. By the end, there were less than three IRA contributions per Keogh.
During this period, Roth IRAs, which are not tax deductible, but instead allow
accrual of untaxed gains, were introduced. However, a downward trend in deductible
contributions to IRAs started before their introduction.
IRA assets grew steadily every year from 1981 to 2000, when the downturn began.
Subsequently, the percentage of assets in banking institutions grew from 9.2
percent (in 1999) to 11.3 percent (in 2002) while the percentage held by insurance
firms rose from 9.3 percent to 10.7 percent. The percentage in mutual funds
and brokerage accounts declined, largely because of failing markets, but these
options continue to include most assets.
"These figures will help inform the debate when Congress considers administration
proposals to eliminate the IRA program and replace it with new individual savings
vehicles like Lifetime Savings Accounts and Retirement Savings Accounts, "
said Dallas Salisbury, EBRI president and CEO.