Consultant’s Corner: Who Has an IRA?

By John Jensen

A recent study by the American College of Financial Services tells us that 62 percent of retirees roll their 401(k) or 403(b) funds over into an IRA when they retire. Conducted in December 2015, the study looked at 1,000 adults age 60+ who had retired within the past three years with $75,000 or more in an employer-sponsored 401(k) or 403(b). Half of responders were at least age 66.

Why is this important?

Since the Charitable IRA provision was originally enacted in 2006, the number of retirees with IRAs has grown dramatically from a modest number to over 3.1 million people, some 11 percent of Americans over age 70.

These donors can now make gifts directly to charities from their IRAs. However, the 38 percent who have left their funds in employer-sponsored 401(k) or 403(b) plans (rather than rolling them over into an IRA) still can’t make gifts directly from these accounts.

All of this information suggests that retirees with any qualified retirement plan are likely to have an IRA when they reach the magic age of 70½. Experience suggests that, over time, many more of those who do not have an IRA initially will transfer their employer-sponsored fund balances to an IRA as they move further into retirement.

This same study also found that five percent of retirees over 60 had never married, making them prime candidates to consider a charitable gift of retirement assets at death.

These numbers make another great case for analyzing your donor data. Click here to explore our data enhancement services.

Source: The American College’s Rollover and Consumer Attitude
Survey, “Consumer Attitudes to Rollovers and Retirement Planning”

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