IRA Rollover Assets to Surpass $1T by 2030
Rollovers from defined contribution (DC) plans are the leading source of funding for individual retirement accounts (IRAs), accounting for 97% of all IRA inflows in 2022, reported recent findings from LIMRA.
The surge in growth will likely continue, LIMRA reported, up to $855 billion in retail rollover activity by this year. IRA rollover activity is also anticipated to jump 34% to $1.15 trillion by 2030.
The increases are attributed to changing factors in the U.S. workforce, job turnover, and retirement, noted LIMRA. The organization estimates that between 60 to 70 million employees leave the workforce each year, meaning that many are transitioning assets from their DC retirement plans into IRAs.
Other drivers include the expansion of private-sector retirement plan coverage for workers today, especially as the rate of defined benefit (DB) plan accessibility declines, and greater implementation of automatic enrollment features. LIMRA cited research from the Employee Benefits Security Administration (EBSA) that showed a higher number of employers are providing private-sector DC plans, up nearly 20% in the past decade. According to EBSA, private sector employers now offer 750,000 DC plans that cover up to 92 million workers.
These workers are also likely to have high account balances when rolling over their assets into an IRA. LIMRA projects that the average IRA rollover for those ages 50 to 74 was over $220,000 in 2023 and 2024.
Key Consideration in Rolling Over Assets
LIMRA’s study highlights four considerations that employees weigh before deciding to roll over their assets into an IRA. This includes control, where investors have complete power of their assets and investment choices; consolidation, where investors merge their assets into one financial institution to be managed by their financial advisor; convenience, including the ability to use seamless apps, self-service web platforms, and connect with a human customer service representative; and the amount and cost of fees.
Out of all factors, employees named consolidation as the most important consideration when debating which firm to roll their assets over to, followed by service. Reputation, recommendations, convenience, investment costs, and an opportunity for better returns were also significant factors, LIMRA found. LIMRA spotlighted an organization’s reputation as another major factor for employees, many who said they would add a company with a trusted reputation to their shortlist of contenders.
The organization also highlighted control as a key consideration for firms to touch on in their asset capture strategies. LIMRA research found that 67% of workers began thinking about rolling over their assets into an IRA for up to three months prior to leaving an employer. Further, investors with higher plan balances, higher household incomes and assets, and who are working with financial professionals are likelier to make these decisions before moving on.
“For these individuals, in particular, control and choice are major motivators,” said Matt Drinkwater, corporate vice president of LIMRA Annuity and Retirement Income Research. “Our recommendation is that any asset capture strategy should emphasize that sort of empowerment message of control — otherwise they may miss those very attractive potential customers.”
Annuity Potential
Despite reports of growing interest in and adoption of guaranteed lifetime income products, LIMRA’s research showed that fewer than 10% of investors and DC plan assets are being rolled over into annuities.
Yet, without a pension strategy, more investors may choose to adopt these features as a response to rising costs and needs in retirement. “There is an emerging factor that may change the IRA rollover market considerably,” said Bryan Hodgens, senior vice president and head of LIMRA Research. “As more workers approach retirement without a pension and more opportunities are available to invest in an annuity within their DC plans, we could see more retired participants opt to keep their money in the plan and take distributions from that instead of rolling it out into an IRA.”
SEE ALSO:
Total U.S. Retirement Assets Down 1.6% in Q1 2025; IRAs Growing Faster than DC
7 in 10 Retirees Over 70 Receive Income from 401(k)s or IRAs
IRAs, Automatic Features, and Ongoing Participation Key to Successful Retirement
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news. She is originally from Queens, New York, but now resides in Denver, Colorado.
