Roth IRAs Growing Rapidly

According to a new analysis by the Employee Benefit Research Institute, the balances of Roth IRAs grew at more than double the rate of traditional IRAs from 2010 to 2012. 

A major reason for these different rates of increase was that new contributions make up a larger proportion of the Roth IRA balances due to the smaller average balances of Roth IRAs.  Additionally, there is a larger percentage of Roth owners making contributions each year than traditional investment owners, thus magnifying the impact of contributions. 

The study also found that the total average IRA account balance in 2012 was $81,660, whereas the average IRA individual balance was $105,000.  The aggregate IRA average balance was 29 percent larger than the unique account balance.  The average individual IRA balance increased with age for those 25 years or older, and IRA owners were more likely to be male. 

See Michael Cohn, Roth IRA Balances Growing Faster Than Traditional IRAs, AccountingToday.com, May 21, 2014.