It looks like you're new here. If you want to get involved, click one of these buttons!
The ICI goes on to note that the purpose of those IRAs was narrow - to fill the gap only for "individuals not covered by retirement plans at work."A little over 30 years ago, Congress enacted and President Gerald R. Ford signed into law the Employee Retirement Income Security Act (ERISA). The purpose of the Act was to protect and enhance Americans’ retirement security by establishing comprehensive standards for employee benefit plans. The Act also created the Individual Retirement Account, or IRA.
The summary, including links to data (with charts) and to the full study, can be found here:The brief’s key findings are:
- IRAs were intended to give those without an employer plan access to a tax-deferred savings vehicle.
- Today, IRAs hold nearly half of all private retirement assets, but most of these funds are rollovers from 401(k)s, rather than contributions.
- The 14 percent of households who do contribute to IRAs include:
- higher-income dual-earners who also save in a 401(k);
- moderate-income singles or one-earner couples, often with a 401(k); and
- higher-income entrepreneurs with no current 401(k).
- One way to turn IRAs back into an active savings vehicle – one used more for contributions – is to auto-enroll all workers without an employer plan in an IRA.
These numbers (from 2017) would suggest not very successful. If all retirees have to go with this is SS (no pension or employer provided health insurance), it would be tough living another 20-30 years on those amounts - even if savvy investors and even if the current exuberant market were to continue bubbling along.How successful have such tax deferred plans been at their original intention of providing ordinary Americans with a secure retirement?
Agreed that the rest of the stuff is just noise. But some of the noise is worth listening to, such as the thought that sometimes simplifying things is a good idea.The benefits for high-net worth investors if required minimum distributions (RMDs) are eliminated are hard to miss.... “Often times, these clients would prefer not to get taxed either because their income is very high or they would prefer to keep this money tax deferred for the next generation.
https://www.kitces.com/blog/proposals-for-eliminating-stretch-iras-repealing-nua-and-the-3-4m-retirement-account-cap-in-the-fy2016-treasury-greenbook/From a tax policy perspective, the tax code provisions allowing tax-deferred growth for traditional retirement accounts (and tax-free growth for Roths) were created to help individuals and couples save for retirement, not their heirs. While this challenge is at least partially ameliorated by the fact that beneficiaries themselves are subject to Required Minimum Distributions after the death of the original retirement account owner, the fact that many/most retirement accounts are left to younger individuals of the next generation means that often the tax preferences for retirement accounts apply even longer for beneficiaries than for the original contributor!
© 2015 Mutual Fund Observer. All rights reserved.
© 2015 Mutual Fund Observer. All rights reserved. Powered by Vanilla
