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The assets of a single retirement account dwarf the assets of 401(k) plans.
According to the Investment Company Institute, a trade group that represents money managers, IRAs held about $19.2 trillion at the end of 2025, while 401(k)s held $10.1 trillion.
Still, relatively few people contribute money directly to IRAs. And their annual savings limits are much lower than those of 401(k)s.
Instead, IRAs are largely the source of “rollovers” from company retirement plans, experts said. In other words, they capture funds that came from 401(k)s and similar plans, but from which investors later moved at a legally specified time, such as when they changed jobs or retired.
According to the latest IRS data, nearly 6 million people contributed money to an IRA in 2023, up from about 4 million in the early 2000s.
In 2023, investors put $682 billion into IRAs – more than three times the initial amount. In contrast, they made just $89 billion in direct IRA contributions in 2023.
“People by and large don’t save any money in IRAs at all,” said David Blanchett, certified financial planner and head of retirement research at Prudential Financial. “All the money in IRAs comes from surpluses.”
Rollover decisions are potentially one of the most important financial decisions many households will make, often costing hundreds of thousands of dollars or more, experts say.
Cerulli Associates, a market research firm, estimates that investors will transfer over $941 billion to IRAs in 2026 and about $1.3 trillion in 2031.
This growth comes as the financial industry defeated a Biden-era investor protection rule in federal court. The Trump administration declined to further defend the rule, which was aimed at raising investment advice standards for insurance agents and others who ask retirement savers for refunds.
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Why rollovers from 401(k) plans to IRAs have increased
According to experts, demographic factors play the largest role in the growth of rollover assets.
Baby boomers are reaching traditional retirement age at a historic pace. According to the Alliance for Lifetime Income, an insurance industry trade group, more than 11,000 Americans turn 65 every day — more than 4 million a year.
Many investors choose to convert their money from a business plan into an IRA when they retire, experts say.
This is due in part to psychology, as workers retiring from an employer no longer want to park their assets in the company’s 401(k), said Philip Chao, CFP, founder and chief investment officer of Experiential Wealth, based in Cabin John, Maryland. Investors may also want to consolidate their financial accounts in one place, he said.
According to Cerulli, traditional – or pre-tax – IRAs gained about $5.2 trillion in total assets from 2020 to 2025. Of that, surpluses accounted for $3.8 trillion, while contributions added just $119 billion, it said.
Of the rest, $3.9 trillion was added through market growth, while investors subtracted about $2.5 trillion.
Advantages and disadvantages of rollovers
Rollovers aren’t necessarily suitable for everyone, experts said.
In fact, many Americans would generally be better off keeping at least some of their money in their 401(k) plan after retirement, since they generally have access to investments and certain services at “very competitive” prices compared to IRAs, Blanchett said.
Once investors move their money from a 401(k) account into an IRA account, it’s not possible to get back in, Blanchett said.
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Additionally, investors in a 401(k) plan generally enjoy greater legal protections, Chao said.
Employers have a legal obligation, known as a “fiduciary duty,” to serve the best interests of employees who participate in company pension plans.
However, depending on the scenario, this obligation may not exist outside of the 401(k) plan context, experts said. Some observers worry that this will lead to certain financial sellers recommending rollovers when it is not in the best interest of investors.
“So many people fall victim to overzealous salespeople,” Chao said.
However, IRAs may make more sense in other scenarios, experts said.
For example, not all companies or 401(k) managers allow flexible withdrawals from a 401(k) plan, making it difficult to withdraw money from such retirement plans on an ad hoc basis, experts say.
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https://www.cnbc.com/2026/06/28/ira-money-401k-rollovers.html
