More than 40% of U.S. households, or 40 million households, owned at least one IRA in 2004, off just slightly from the 41.4% of 2003, an annual ownership study from the Investment Company Institute reveals. That number, however, is somewhat higher versus the 39.5% of 2002 and the 39.7% of 2000 and 2001.

A second, retrospective study from the institute analyzed IRAs since their inception 30 years ago and found that the investment vehicles have gained $3 trillion in assets to become the No. 1 player in the $11.6 trillion retirement market.

ICI officials, however, said sustained growth is only one part of the IRA story, which traces its beginnings to the Employee Retirement Income Security Act of 1974.

"Experience shows that individuals respond positively to incentives to build retirement assets. Incentives work best when rules, structure,and provisions are simple, flexible,and predictable," said ICI Senior Economist Sarah Holden, co-author of the retrospective report. "In contrast, complexity discourages the use of IRAs.

"To see the benefits of simplicity in design, we need only to look at the early and mid 1980s when IRAs were 'universal' and all workers under age 70.5 were eligible to make tax-deductible contributions," Holden said in a statement accompanying the study.

From 1982 to 1986, contributions jumped to an average $34.4 billion annually. When the Tax Reform Act of 1986 reintroduced limitations on deductible contributions, along with increased complexity of determining eligibility, IRA contributions fell in 1987 to $14.1 billion, the ICI study indicates.

A key finding of the ownership study, which randomly surveyed about 3,500 households and drew upon Internal Revenue Service income information, is that traditional IRA holders have greater financial assets but smaller incomes. Traditional IRA investors are also typically older and oftentimes retired. By contrast, investors in taxable Roth IRAs, which were created just five years ago, have the highest median incomes, but the lowest median financial assets. Their average age is 44.

The ICI study also examined SIMPLE and SAR-SEP accounts, which are tax-deferred retirement investment vehicles that target small business owners.

IRA inflows have been remarkably consistent in recent years, too, the study indicated. For example, 26% of the households with a traditional IRA contributed a median amount of $2,500 to their accounts in 2003. That compares to 27% contributing roughly $2,000 apiece in 2002 and 27% socking away about $3,000 each in 2003, Dow Jones News Service found. About 15% of them, or around 9.5 million households, withdrew from traditional IRAs, which is comparable to the preceding two years. In 2003, 41% of Roth IRA householders contributed a median of $3,000 to their IRAs.

Other significant findings show that in 2004, about 65% of all households chose mutual funds for their IRA portfolio, while individual stocks and annuities accounted for 37% and 31%, respectively, of household IRA investment. Bank deposits drew 27% of household IRA dollars. Rollovers are also an important means to funding traditional IRAs, the study said, as 72% of households have conducted at least one rollover from an employer-sponsored retirement plan.

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