Few making contributions to their IRAs, says ICI study

Estimated reading time: 2 minutes, 26 seconds

According to a recent study by the Investment Company Institute, although most households were eligible to contribute to an IRA in 2014, only 14% did so. Very few eligible households made any catch-up contributions, either. While the percentage of U.S. households that contributed to IRAs was actually higher than in the previous tax year, it is tied for the lowest percentage among all other years since 2007 (14%).

No matter the investment activity in your Self-Directed IRA, you should make regular contributions in order to maximize your potential retirement benefits.

TAKEAWAY #1: Most of those eligible to make contributions to any type of IRA are simply not opening an account in the first place.

As we have mentioned elsewhere, even if you have an employer-sponsored plan such as a 401(k), you can still open and make regular contributions to an IRA. Depending on your circumstances, you can open a Traditional IRA, SEP IRA or SIMPLE IRA and only have to pay taxes on any contributions or gains when you begin to make withdrawals. Or you may choose a Roth IRA, pay taxes up front and enjoy tax-free qualified withdrawals.

Also, you can hold any of the four IRA types at Kingdom Trust and self-direct your investments via a Self-Directed IRA structure. You can invest in real estate, precious metals, private equity opportunities, crowdfunding, and so much more.

TAKEAWAY #2: A majority of those that hold IRAs aren’t contributing to them.

In the self-directed retirement industry, some account holders may forget that they may contribute to their IRA up to certain limits. By not contributing, you may be reducing your potential returns upon your retirement.

Retirement investingLet’s use rental property as an investment example. After the initial purchase of the property by the IRA, an investor may choose not to contribute any regular dollars into his account, settling for gains only from rent income. While he might reinvest that rent income into other investments, he is still missing out on any potential benefits from regular contributions, which can likewise be used to reinvest into other investments.

You can make contributions to a Kingdom Trust Self-Directed IRA, just as you would for any other IRA. You can contribute via check, wire or ACH (necessary forms are found in the Manage My Account section). Furthermore, those contributions can easily be used to invest in both traditional and non-traditional, alternative assets.

There is positive news in the report, though. 43% of those households that owned IRAs in mid-2015 made contributions in tax year 2014. That figure was higher than in tax year 2013 (34%) and 2012 (39%).

We love to see these savings numbers increase as it becomes more and more important to save for retirement via an IRA, an employer-sponsored defined contribution plan, or both. And Kingdom Trust is here to help you every step of the way. Open an online account today to get started with self-directing part or all of your retirement, or contact us for more information.

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