Americans held nearly $9 trillion more in individual retirement accounts than in 401(k) plans at the end of 2025, according to data from the Investment Company Institute, highlighting how rollovers rather than direct savings have become the main driver of IRA growth.
Individual retirement accounts held about $19.2 trillion, compared with $10.1 trillion in 401(k) plans.
The Reason? Rollovers.
Investors contributed just $89 billion directly to IRAs in 2023, while $682 billion came from rollovers, or money transferred from 401(k)s and similar workplace retirement plans when workers changed jobs or retired, according to IRS data.
"People by and large don’t save money in IRAs at all," said David Blanchett, a certified financial planner and head of retirement research at Prudential Financial, told CNBC. "All the money in IRAs is coming from rollovers."
Nearly 6 million people rolled money into IRAs in 2023, up from about 4 million in the early 2000s, while the total dollar value of those transfers has more than tripled.
That Trend Is Expected To Accelerate.
Cerulli Associates estimates rollovers will reach $941 billion in 2026 and climb to roughly $1.3 trillion by 2031, driven largely by baby boomers reaching retirement age. More than 11,000 Americans turn 65 each day, according to the Alliance for Lifetime Income.
The retirement shift is happening as financial anxiety continues to rise. A BlackRock (NYSE:BLK) survey published this month found 76% of workplace savers believe their generation will have less retirement income certainty than previous generations, up from 67% in 2021.
The Rollover Risk
Moving retirement savings into an IRA may offer greater flexibility, but experts warn the decision can carry major long-term consequences.
Keeping money inside a 401(k) after retirement can provide access to lower-cost investments and stronger legal protections, since employers managing those plans must act in workers’ best interests under fiduciary rules. Those protections may not always apply once assets are moved into an IRA.
"So many people become victims of overzealous salespeople," said Philip Chao, CFP and founder of Experiential Wealth.
Concerns around rollover advice have grown since a Biden-era rule aimed at raising investment-advice standards for insurance agents soliciting rollovers was struck down in federal court. The Trump administration declined to continue defending the rule.
The issue remains especially important because roughly 54 million Americans still lack access to employer-sponsored retirement plans, according to the Economic Innovation Group, leaving many households with limited retirement-saving options.
Still, IRAs can make more sense in certain situations, particularly for retirees whose 401(k) plans do not allow flexible or ad hoc withdrawals.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image via Shutterstock/ OlegD
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