Owners of small IRAs, you might think, are low- or middle-income workers. But you’d be wrong, according to the Department of Labor.
Instead, DOL said in a report, more than two thirds of the owners of small IRAs are wealthy and upper-middle-class households.
What’s more, those small IRAs usually only account for a single component of a larger financial portfolio.
And the people who would be most prone to getting advice subject to conflicts of interest are those who can least afford the consequences.
Approximately 70 percent of all nonelderly households owning small IRAs — those worth less than $25,000 — are in the top half of income distribution, said the report.
Further, almost 38 percent are in the top quarter. This category of small-IRA owners “generally own their own homes as well as other types of financial assets such as job-based defined-contribution plans, stocks, and mutual funds,” said the report.
But that other third of small-IRA owners, those who are low- and middle-income workers, is particularly vulnerable to conflicts of interest in the advice they receive on what to do with those small IRAs.