IRA assets now trump their 401(k) counterparts due in part to rollovers from job separations, according to a new report from Cogent Research. The report, 2010 Investor Assets in Motion: IRA & Retirement Marketplace Opportunities, finds that wealthy Americans now hold more assets in IRAs than in workplace-based retirement accounts like 401(k)s and 403(b)s.
While ownership of both types of retirement accounts is down since 2006, ownership of workplace-based retirement accounts has decreased much more dramatically. Since 2006 IRA ownership has slid by just 5%, meanwhile ownership of workplace-based retirement accounts has decreased by almost one quarter (23%,).
It appears that the majority of dollars that investors formerly allocated to ESRPs have been funneled into IRA accounts and, to a lesser extent, bank accounts. This shift has resulted in the proportion of assets affluent Americans hold in IRAs (31%) to surpass the proportion of assets they hold in 401(k) and other employer-based retirement plans (25%).
“The good news here is that while many Americans are losing access to 401(k) plans as a result of job separation, choosing to bypass their 401(k)s, or simply retiring they are making smart decisions regarding where to move their money – namely putting it in an IRA.” said Meredith Lloyd Rice, Cogent Senior Research Director and author of the study, in a press release.