2015 marks the 40th birthday of the Individual Retirement Account (IRA). Born under the Employee Retirement Income Security Act (ERISA) of 1974, Congress introduced this new type of retirement plan in response to private pension breakdowns – most notably that of car manufacturer Studebaker-Packard.
In 1963, Studebaker-Packard filed for bankruptcy and couldn’t afford to pay out employee pensions, resulting in thousands of people having little to no money for retirement. Congress, realizing Americans needed protection from total pension loss, started the long process of formulating a law.
“The whole point of ERISA was to protect workers’ earned pension benefits and roll them into their own individual retirement account,” says Ed Slott, IRA expert and founder of IRAhelp.com.
IRAs also provided an alternative for workers’ to save on their own rather than relying completely on company pensions to fund retirement.
Fast-forward 40 years and the IRA has turned into a major retirement vehicle with some 19.9 million Americans having at least one IRA account, according to the most recent data available (2012) from the Employee Benefit Research Institute (EBRI).
If you’re considering an IRA Rollover, Ally Bank is offering up to a $500 bonus when you roll over your IRA from outside Ally Bank to a new or existing Ally IRA CD or IRA Online Savings Account now through May 31, 2015. The bonus deposit of $100, $250 or $500 is based on the qualifying rollover or transfer amount.