Roth IRA investors are younger than traditional IRA holders and more likely to start their savings with contributions rather than rollovers, according to a study by the Investment Company Institute (ICI) released Tuesday.
Roth IRAs, first available in 1998, held more than $500 billion in assets at the end of 2014 and accounted for 7 percent of all IRA assets, ICI says.
“Roth IRA investors use rollovers infrequently, contribute more frequently and make withdrawals much more rarely," says Sarah Holden, ICI’s senior director of retirement and investor research and a co-author of the report.
Thirty-one percent of Roth IRA investors are younger than 40 compared to 15 percent of traditional IRA investors, according to the study. Only 24 percent of Roth IRA investors are 60 years of age or older, compared with 38 percent of traditional IRA investors.
Roth IRAs have income limits, which means older workers may have too high of an income to contribute or rollover to a Roth IRA, ICI says. Also, rollovers tend to happen after workers change jobs, so they tend to be older, ICI adds.