How Studebaker Shaped the IRA

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

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).

See the history of the IRA and how it has evolved since its introduction in 1975.


This blog first appeared on the Straight Talk Blog, February 26, 2015.

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