EBRI’s IRA Research

EBRI created the EBRI IRA Database^TM in order to more closely examine retirement savings behavior.

The EBRI IRA Database^TM is able to link individuals within and across the data providers and will also be able to link the data with participants in 401(k) plans, allowing retirement funds to be tracked as they are generated, rolled over, and ultimately used. The current list of EBRI’s IRA publications is online here.

The February 2014 EBRI Notes (online here) analyzes IRA withdrawals. using the EBRI IRA Database.^TM

Among the top-level findings:

Withdrawals from IRAs tend to be small and closely follow the rates dictated by the federal required minimum distribution (RMD) rules that apply to individuals age 70-1/2 or older.

The median withdrawal rate for those taking a distribution was found to be 7.4 percent for the combination of traditional and Roth IRAs and    6 percent when considering traditional IRAs only. Just over 16 percent of traditional and Roth IRA accounts combined had a withdrawal in 2011 (the latest data available), including 20.5 percent of traditional IRA accounts.

EBRI found that withdrawal activity was “largely driven by activity among traditional IRAs owned by individuals ages 70-1/2 or older, where the individuals were required (by law) to make withdrawals.”

By contrast, among IRA owners ages 25–59, less than 10 percent took a withdrawal from those accounts.

“For those at the age where they had to make a withdrawal, the median withdrawal rates appeared close to the amount required by law to be withdrawn,” said Craig Copeland, senior research associate at EBRI and author of the report.

He also noted that in situations where there was both a rollover and a withdrawal, the movement of funds appeared to reflect a desire to take advantage of differing tax rules between IRAs and employment-based retirement plans from which the rollover likely originated.

 IRAs are currently the largest repository of retirement funds in the United States, representing more than 25 percent of all retirement assets. As the report notes, a substantial portion of these assets originated in other tax-qualified retirement plans, such as defined benefit (pension) and 401(k) plans, and were moved to IRAs through rollovers at job change.