The Role of IRAs in US Households’ Saving for Retirement, 2022

This paper presents survey results on the incidence of individual retirement account (IRA) ownership in the United States and the contribution, rollover, and withdrawal activity of IRA-owning households. IRAs play an important role in US households’ retirement saving: In mid-2022, more than four in 10 US households owned IRAs. Traditional IRAs were the most common type of IRA owned (31 percent of US households), followed by Roth IRAs and employer-sponsored IRAs. IRA-owning households often also had employer-sponsored retirement plan accumulations or had DB plan coverage. Rollovers from employer-sponsored retirement plans (both DB and DC) have fueled the growth in IRAs: In mid-2022, 60 percent of traditional IRA–owning households indicated that their IRAs contained rollovers. Among households with rollovers in their traditional IRAs, 85 percent indicated that they had rolled over the entire retirement account balance in their most recent rollover; 44 percent had also made contributions to their traditional IRAs at some point. Traditional IRA–owning households with rollovers cite multiple reasons for rolling over their retirement plan assets into traditional IRAs. The three most common primary reasons for rolling over were not wanting to leave assets behind at the former employer, wanting to consolidate assets, and wanting to preserve the tax treatment of the savings (22 percent, 22 percent, and 15 percent of traditional IRA–owning households with rollovers, respectively). IRA withdrawals were infrequent and mostly retirement related. Twenty-nine percent of traditional IRA–owning households in mid-2022 took withdrawals in tax year 2021 compared with 23 percent in tax year 2020. Some of the increase in withdrawal activity resulted from the return of required minimum distributions (RMDs) in tax year 2021, which had been suspended in tax year 2020. The majority of traditional IRA withdrawals were made by retirees. Ninety percent of households that made traditional IRA withdrawals were retired. Indeed, only 5 percent of traditional IRA–owning households in mid-2022 headed by individuals younger than 59 took withdrawals. Seventy-four percent of traditional IRA–owning households with withdrawals calculated the withdrawal using the RMD rule—this was the most common amount withdrawn. Most traditional IRA–owning households have a planned retirement strategy. Results are primarily based on the ICI Annual IRA Owners Survey, which in 2022 included 3,232 representative US households owning traditional IRAs or Roth IRAs