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Most IRA money comes from 401(k) rollovers, not contributions
CNBC • • business
Key Points:
- Individual retirement accounts (IRAs) held approximately $19.2 trillion at the end of 2025, nearly double the $10.1 trillion held in 401(k) plans, primarily due to rollovers from workplace retirement plans rather than direct contributions.
- In 2023, nearly 6 million people rolled over $682 billion into IRAs, a significant increase from the early 2000s, while direct IRA contributions were only $89 billion, highlighting that most IRA assets originate from 401(k) rollovers.
- The growth in rollovers is largely driven by baby boomers retiring at a historic rate, with more than 4 million turning 65 annually and choosing to consolidate retirement assets into IRAs for convenience and control.
- Experts caution that rollovers are not always the best option, as 401(k) plans often offer lower costs, better legal protections, and fiduciary oversight, which may be lost when funds are moved to IRAs.
- Despite potential drawbacks, IRAs can offer advantages such as more flexible withdrawal options, which some 401(k) plans may not provide, making rollovers beneficial in certain circumstances.
