With the IRA deadline approaching on April 15, 2015, you’re likely reminding your customers and members to make their last-minute IRA contributions for the 2014 tax year. But how often do you remind them throughout the year to roll over their money from qualified retirement plans to an IRA at your financial institution?
Rollovers overwhelmingly outweigh new contributions in dollar terms, according to the Employee Benefit Research Institute’s IRA Database (an ongoing project that collects data from IRA plan administrators nationwide). While almost 2.4 million accounts received contributions in 2012, compared with the 1.3 million accounts that received rollovers that year, the amount of dollars added to IRAs through rollovers was 10 times that from contributions.*
Why market IRAs year-round?
- Valuable IRA rollover and direct transfer dollars are up for grabs all year long, and it’s important to position your financial institution as top of mind for those dollars.
- IRAs help you become the primary financial institution for more of your customers and members.
- IRA deposits provide cross-selling opportunities and stable funds that you can use for lending purposes.
Position yourself as the educator
With multiple types and ever-changing regulations, IRAs can be perceived as complex and confusing. By offering education on pertinent updates or general IRA know-how, you demonstrate that you are looking out for customers and members by simplifying their savings goals, and you simultaneously underscore your credibility and expertise for added trust factor.
As an example, consider an email blast about the new IRA rollover rules for 2015, under which only one rollover from one IRA to another (or the same) IRA is allowed in any 12-month period. Be sure they understand:
- The difference between a rollover and trustee-to-trustee transfer, the latter of which doesn’t apply to the new rollover limits because the money is never in the taxpayer’s possession.
- The fact that they can spare themselves unnecessary taxes and penalties by not cashing out their retirement plans when they change jobs and instead transferring those funds directly to your financial institution.
Know your target market
Younger customers or members are more likely to contribute to their Roth IRAs; 43 percent of Roth owners ages 25-29 contributed to their Roth in 2012, compared to just 21 percent of those ages 60-64.* Also, IRA owners, especially those with an IRA originally opened by a rollover or a SEP/SIMPLE IRA, are more likely to be male. Males also have a higher individual averages and median balances. However, the likelihood of contributing to an IRA does not significantly differ by gender.
What does all of this mean? In the simplest of terms, consider who you are most likely reaching in your specific IRA messages and tailor your copy, images and distribution accordingly. If it’s about contributing to a Roth, target a younger audience with more youthful imagery and design. If you’re trying to attract rollovers, perhaps a male focus would be most cost-effective to start out. For promotions about making regular contributions, both genders should be targeted.
Whatever you do to market IRAs, always offer a contact at your financial institution for more information or answers to questions. This is one product that lends itself well to getting your foot in the door just by being helpful!
*The EBRI IRA Database, May 2014