June 6, 2012

Individuals’ Combined IRA Balance Higher Than Overall Average

An individual’s average balance of combined IRA accounts tops average of all IRAs

Average IRA balances are about a third higher, and the median balance is about 42% higher, when an individual’s multiple accounts are considered together, the Employee Benefit Research Institute found.

Average IRA Account Balances, 2010In 2010, an average combined IRA balance for an individual was $91,864, according to an analysis of EBRI’s IRA database. The median balance was $25, 296. For all IRAs, the average balance was $67,438, up 32% from 2008. The median balance was $17,863, up 26% from 2008.

“The results show the importance of being able to look at an aggregation of an individual’s combined account balances to determine the potential total retirement savings he or she has,” Craig Copeland, EBRI research associate and author of the report, said in a statement.

The analysis, released in May, is based on data from more than 11 million individuals in the EBRI IRA database.

Individuals with the highest average and median balances had traditional IRAs that originated from a rollover. Their average balance was $123,426, with a median balance of $38,138.

“When comparing the incidence and dollars going into IRAs from the two funding sources of contributions and rollovers (aside from capital gains and interest earnings), rollovers overwhelmingly outweighed new contributions,” Copeland wrote.

Although more than 1 million accounts received a contribution in 2010, compared with just 665,000 accounts that received a rollover, the size of the rollovers made in dollars is almost 12 times the size of the contributions made.

“This is not surprising, in view of the annual IRA contribution limit of $5,000 ($6,000 for those age 50 or older), relative to the theoretically unlimited amount that could be added through a rollover,” Copeland added.

The average rollover amount was $69,012 and the average contribution was $3,335. More than 43% of individuals made the maximum contribution.

Roth IRA owners had the lowest average balance at $22,437 and a median balance of $11,471, despite receiving more contributions than traditional accounts. The average contribution to traditional accounts was $3,517, compared with $3,240 for Roths, but, overall, Roths took in $2.3 billion in contributions, compared with $1.3 billion for traditional accounts.

 “The average and median total individual balances increased for each IRA type, each age group, and each gender group,” Copeland noted in the report. “Consequently, it appears that the total average and median increase in balances is explained by an actual increase in the dollars individuals are holding in IRAs, rather than just differences in the databases.”

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