Rollovers into traditional IRAs occur across the working years, not just at retirement, according to the Investment Company Institute.

In 2007 and 2008, each five-year age band from the 30 to 34 age group up to the 60 to 64 age group accounted for 10% to 13% of the total number of IRA rollovers. Nearly 21% of all traditional IRA investors in 2008 had made a rollover that year or in in 2007.

The data comes from a new database unveiled in July that collects account-level data of more than 10 million individual retirement accounts.

Among younger people, most open their IRA accounts with a rollover.

Other sources show that more than half of households owning traditional IRAs report having made a rollover in the past.

IRA investments, which totaled $4.2 trillion at the end of the second quarter, represent more than a quarter of the total U.S. retirement market assets and nearly 10% of U.S. households’ total financial assets. In 2007, preliminary estimates from the IRS Statistics of Income division indicate, rollovers accounted for $323.1 billion in gross inflows to traditional IRAs, while contributions were $14.4 billion.

In short, rollovers have played a significant role in boosting the aggregate level of assets in traditional IRAs.

Clients with poor investment choices or high expenses in their 401(k)s would do well to rollover to an IRA. Other advantages are that they can borrow against a 401(k) balance, which is not permitted by IRA rules. On the other hand, they can withdraw money from an IRA without meeting the specific guidelines in most 401(k)s, although there are taxes and a 10% penalty.

According to Cogent Research, which surveyed 4,000 American investors with at least $100,000 in investable assets, 13% closed at least one investment account last year. Of those, the number that cited rollover as their reason for closing an account doubled last year compared to the previous five years, and the number citing a need to access account funds tripled.

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