According to a new report put out by the Investment Company Institute (ICI) and the Securities Industry and Financial Markets Association (SIFMA), and based on findings from their recently launched IRA Investor Database-a joint project designed to further research into IRA activity-people who contribute money to an IRA are more likely to remain faithful to their investment than investors in other tax preferred saving vehicles. They are also likely to make the maximum contributions allowed by law, the ICI said in a statement.
"The new account-level data have given us a detailed view into the various factors that play a role in IRA contributions, including commitment among the group of traditional IRA contributors," Sarah Holden, ICI senior director of retirement and investor research, said in the statement.
The report highlighted the fact that 63% of traditional IRA investors who contributed to their accounts in 2007 made repeat contributions in 2008, and 60% of those who contributed in 2007 made the largest contribution allowed by law, with contribution amounts increasing with income. Among those who maxed out in 2007, more than half increased their contributions in 2008 to the new, higher legal limits, the report found. Also, legal limits on traditional IRA contributions increased in 2008, and more than half who contributed at the legal limits in 2007 increased their contributions to the new legal limit in 2008, the report said.
According to the report, traditional IRA investors also tended to favor saving in vehicles such as Roth IRAs.
The ICI and SIFMA will be releasing three other reports based on findings from the database, looking at rollovers from other retirement plans into IRAs, IRA investors' asset allocations, and IRA withdrawals.