To comply with changing international privacy requirements, ICI informs its visitors that we use cookies on our web site. ICI only uses cookies to allow subscribers and members to more easily use our site and to record site utilization. No personal or private information is gathered or stored. More details, including how to disable cookies, can be found on our privacy and cookie policy page. If you disable cookies, you will see this message on future visits to our site. Please click the enable button to consent to accepting cookies.
  • ICI Global
  • Independent Director's Council
Sign In  |  Forgot Password?
Advanced | Tips
  • Home
  • Policy Priorities
    • Fund Regulation
    • Retirement Security
    • Trading & Markets
    • Fund Governance
    • Taxes
    • ICI Comment Letters
  • Research & Statistics
    • Industry Research
    • Investor Research
    • Retirement Research
    • Statistics
  • Government Affairs
    • Financial Services
    • Retirement Security
    • Tax
    • Testimony
  • Industry Operations
    • Fund Accounting, Financial Reporting, and Valuation
    • Fund Distribution, Fund Clearance, and Settlement
    • Operations, Transfer Agent Servicing, and Recordkeeping
    • Portfolio Security Operations
    • Resource Centers
    • Technology, Business Continuity, and Information Security
  • News & Media
    • Media Contacts
    • News Releases
    • Blog: ICI Viewpoints
    • Speeches & Commentaries
    • Opinions & Responses
    • Videos
  • Publications & Resources
    • Resource Centers
    • Frequently Asked Questions
    • Fact Books
    • Research Publications
    • White Papers
    • Annual Reports
    • Service Directory
  • Events
    • ICI Events
    • ICI Global Events
    • IDC Events
    • Past Event Highlights
    • Sponsorship Opportunities
    • Event Contacts
  • About ICI
    • Mission & History
    • Board & Leadership
    • Membership
    • Annual Reports
    • ICI Education Foundation
    • Business Continuity
    • Careers
    • Contact Us

TOPICS

401(k)
Bond Fund
Bonds
Commodity Investments
Corporate Bonds
Cybersecurity
Equity Fund
Equity Investing
Europe
Events
Exchange-Traded Funds
Federal Reserve
Financial Markets
Financial Stability
Fixed Income
Fund Governance
Fund Regulation
GMM
Global
Government Affairs
ICI Global
IDC
IRA
Index Fund
Interest Rate
International
Investment Education
Investor Research
Money Market Funds
Mutual Fund
Operations and Technology
Policy Research
Proxy Voting
Retirement Policy
Retirement Research
Savings
Shareholder
Target Date Funds
Taxes
Trading
Treasury

ARCHIVE

  • 2019
    • February
    • January
  • 2018
    • December
    • November
    • October
    • September
    • August
    • June
    • May
    • March
    • February
    • January
  • 2017
    • December
    • November
    • October
    • September
    • August
    • July
    • June
    • May
    • April
    • March
    • February
    • January
  • 2016
    • December
    • October
    • September
    • August
    • July
    • June
    • May
    • April
    • March
    • February
    • January
  • 2015
    • December
    • November
    • October
    • September
    • August
    • July
    • June
    • May
    • April
    • March
    • February
    • January
  • 2014
    • December
    • October
    • September
    • August
    • July
    • June
    • May
    • April
    • March
    • February
    • January
  • 2013
    • December
    • October
    • September
    • August
    • July
    • June
    • May
    • April
    • March
    • February
    • January
  • 2012
    • December
    • November
    • October
    • September
    • August
    • July
    • June
    • May
    • April
    • March
    • February
    • January
  • 2011
    • December
    • November
    • October
    • September
    • August
    • July
    • June
    • May
    • April
    • March
    • February
    • January
  • 2010
    • December
    • November

Home Viewpoints

Print this page

Three Reasons Why You Should Consider an IRA

By Sarah Holden

March 8, 2016

April 18 is the deadline to file income tax returns with the federal government this year. But tax day is also another important deadline: until that date, workers can make contributions to their individual retirement accounts (IRAs) for the previous year. IRAs offer a great tax-advantaged savings opportunity.

Here are three reasons why you should consider an IRA as a valuable tool for your retirement savings:

1. Traditional IRAs provide all workers—regardless of income—with access to tax incentives to save for retirement. Tax deferral can help you build a nest egg over time by putting off taxes on your investment earnings until you retire. Contributing to an IRA is a great way to invest and build retirement savings.

2. The flexible structure of IRAs provides Americans with choices when it comes to their retirement savings. For example, workers decide how much they want to contribute and when. Workers who are aged 49 and younger currently can contribute up to $5,500 to their IRA; workers who are 50 or older can contribute up to $6,500. IRA contributions can be made at any time during the year. And you’re not limited to a traditional IRA. Workers who meet certain qualifications may decide to open a Roth IRA. Unlike traditional IRAs, workers pay tax when they make contributions into Roth IRAs, but pay no taxes on qualified withdrawals in retirement.

3. Workers can easily roll over their employer-sponsored 401(k) assets into an IRA upon leaving a job. Job changers who cash out their 401(k) may have to pay taxes on their assets, and possibly a penalty tax for early withdrawal. But these taxes and penalties can be avoided by rolling over 401(k) assets into an IRA, which is not tied to an employer and allows the individual to keep saving for retirement.

Today, Americans are increasingly using IRAs to grow and maintain their savings for retirement. As of 2015, more than 40 million U.S. households reported that they owned IRAs, according to “The Role of IRAs in U.S. Households’ Saving for Retirement, 2015.” Other research from ICI shows that Americans have $7.3 trillion invested in these accounts.

But IRAs are only one piece of our multilayered retirement-savings system. When IRA assets are combined with all other assets earmarked for retirement, Americans have set aside $23.5 trillion. The various pieces of the entire system—including IRAs, employer-provided defined benefit and defined contribution plans, personal savings, and Social Security—are working well for millions of workers. In fact, successive generations of near-retirees have reached retirement with higher wealth than the previous generation.

To learn more about IRAs and the strength of America’s retirement system, visit www.ici.org/retirement.

Sarah Holden is senior director for retirement and investor research at ICI.

TOPICS: Investment EducationMutual FundSavingsTaxes


top
  • About ICI
  • About IDC
  • About ICI Global
  • Privacy and Cookie Policy
  • Apply for User Account
  • Business Continuity
  • Contact ICI

Copyright © 2019 by the Investment Company Institute