Tuesday, June 10, 2008
Congress created individual retirement accounts (IRAs) with two goals: (1) to provide a retirement savings vehicle for workers without employer-sponsored retirement plans, and (2) to preserve individuals’ savings in employer-sponsored retirement plans. However, questions remain about IRAs’ effectiveness in facilitating new, or additional, retirement savings. GAO was asked to report on (1) how IRA assets compare to assets in other retirement plans, (2) what barriers may discourage small employers from offering IRAs to employees, and (3) the adequacy of the Internal Revenue Service’s (IRS) and the Department of Labor’s (Labor) oversight of and information on IRAs. GAO reviewed reports from government and financial industry sources and interviewed experts and federal agency officials.
What GAO Recommends.
GAO believes Congress should consider whether payroll-deduction IRAs should have some direct oversight in response to Labor’s comments that it does not have jurisdiction over these IRAs. GAO also recommends Labor examine ways to encourage employer sponsorship of IRAs, and evaluate ways to determine whether employers offering IRAs are in compliance with the law, and ways to collect additional information on IRAs. GAO recommends IRS routinely publish and give Labor data on IRAs. Neither IRS nor Labor agreed or disagreed with the recommendations.
To view the full product, including the scope
and methodology, visit http://gao.gov/docsearch/abstract.php?rptno=GAO-08-590
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