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Investment Management & Trust Update Newsletter- April 2018

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Is conversion to a Roth IRA right for you? 

Individual Retirement Accounts have been with us only since 1974, with the passage of the Employee Retirement Income Security Act (ERISA). What’s more, when they began their tax-preferred existence, the IRA contribution limits were quite low, and there were severe restrictions on who could even make a contribution. Notwithstanding the slow start, IRAs have grown to be the largest piece of the retirement savings pie, at some $7.9 trillion, according to the Investment Company Institute. All defined contribution pension plans, such as 401(k) plans, 403(b) plans, and profit sharing plans stand at $7.0 trillion. (See graph below.) 

Private pension plans, once the mainstay of retirement financial security, have assets of only $2.9 trillion. If we add in the pension plans of federal, state, and local governments, the total comes to $8.4 trillion. 

So, IRAs are a vital retirement resource. They did not get this large through ordinary annual contributions and wise investing. The key growth driver has been rollovers of distributions from employer qualified retirement plans. An estimated 85% of new IRAs each year have rollover contributions. Rollovers may come from 401(k) plans, or they may be lump sum distributions cashing out from traditional pension plans. Employers in recent years have been encouraging retirees to choose lump sums, in part because it shifts longevity and investment risks to the participant, away from the plan sponsor.


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1 Ward Parkway • Kansas City, MO 64112 • 816-751-4200

Trust and Investment Services:
• Are not insured by the FDIC or any other federal government agency.
• Are not deposits of, nor guaranteed by, the Trust Company or any Trust Company Affiliate.
• May lose value.