401K's get the Press-But IRA's have $1 Trillion more in Deposits! Credit Unions Looking for Best Practices

The continuing publicity on corporate 401K retirement plans with concentrations in parent company stock has missed one critical point. Far more retirement dollars are invested in IRA accounts most of which are managed by the individual account holder than in all 401K plans.

 
 

401K's get the Press-But IRA's have $1 Trillion more in Deposits! Credit Unions Looking for Best Practices.

The continuing publicity on corporate 401K retirement plans with concentrations in parent company stock has missed one critical point. Far more retirement dollars are invested in IRA accounts most of which are managed by the individual account holder than in all 401K plans. At yearend 2000, the Investment Company Institute estimates there were $2.7 trillion in IRA balances and $1.6 trillion in 401k accounts.

More importantly credit unions are an important IRA option holding over $40 billion in over 4.1 million accounts. As members seek to rebalance their investment choices, insured IRA's are becoming more important especially in older member's options.

With the 50% or 75% increases in IRA deductions authorized beginning in 2002, more money should flow into these accounts.

However recent data shows that 37% credit unions members are not aware their credit unions even offer IRA's. The majority of members (51%) did not even know about the increased contributions levels beginning in 2002!

The member data was drawn from eleven credit unions who surveyed their members on line in January, 2002. The purpose of the survey was to help each credit union prepare a more effective IRA campaign.

In addition to the data collected covering ten different areas of members' IRA plans, the credit unions shared their findings with each other to try to learn about "best practices." For example in one survey 39% of members reported holding an IRA at the credit union, a total almost double the average of the other surveys.

According to Scott Patterson, Manager of the E-Commerce Division at Callahans, "We think all the press accounts about retirement plans will only increase interest in IRA's. Because credit unions have a trust relationship with members, we believe the public will be turning more and more to credit unions for advice and options this IRA season."

 

 

 

Feb. 4, 2002


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