Most taxpayers have individual retirement account balances below $1 million, but some have balances topping $5 million.
So concludes the U.S. Government Accountability Office (GAO) in a September 2014 report on IRAs, which offers “preliminary information” on IRA balances accumulated as of 2011, the most recent tax year for which IRA data is available. To arrive at its findings, the GAO calculated hypothetical accumulations using historical stock market returns and return rates needed to accumulate balances of $1 million or $5 million under each of two contribution scenarios compliant with statutory limits between 1975 and 2011.
For the tax year of 2011, the report pegs the fair market value of IRA account balances among an estimated 43 million taxpayers at $5.2 trillion. About 99 percent of these taxpayers ($42.4 million) had aggregate account balances (including inherited IRAs) of $1 million or less. Fewer than 8,000 had account balances exceeding $5 million.
“Generally, taxpayers with IRA balances of $5 million or more tend to have higher adjusted gross incomes, be joint filers and 65 or more years old,” the report states. “Even assuming maximum contributions sustained over decades and rolled over from an employer plan, it would take an aggressive stock market investment strategy to accumulate an IRA balance of $5 million.