Younger investors more attracted to Roth IRAs

By BenefitsPro

By Paula Aven Gladych

Younger people are more likely to contribute to a Roth IRA than more traditional individual retirement accounts.

According to a report by the nonpartisan Employee Benefit Research Institute, nearly a quarter of the Roth accounts receiving contributions were owned by people between the ages of 25 and 34 compared to just 8.9 percent of this generation who contributes to a traditional IRA.

Of those who owned a Roth IRA in 2011, 44 percent of those ages 25 to 29 contributed to their account compared to 21 percent of those between the ages of 60 and 64.

Contributions to traditional retirement accounts didn’t vary significantly by age, according to the report, as the percentage ranged from 6 percent to 9 percent for account owners up through age 64.

IRAs are a vital piece of the retirement savings puzzle, holding more than 25 percent of all retirement assets in the United States, EBRI said. A substantial and growing portion of these IRA assets originated in other tax-qualified retirement plans, such as defined benefit pensions and 401(k) plans.

The EBRI IRA Database contains data collected from various IRA plan administrators on 20.5 million accounts owned by 16.6 million unique individuals with total assets of $1.456 trillion.

The Employee Benefit Research Institute is a private, nonpartisan, nonprofit research institute based in Washington, D.C., that focuses on health, savings, retirement and economic security issues.

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