IRAs hold trillions more than 401(k) plans — yet people hardly save in them

LivestreamMenuMake ItselectUSAINTLLivestreamSearch quotes, news & videosLivestreamWatchlistSIGN INCreate free accountMarketsBusinessInvestingTechPoliticsVideoWatchlistInvesting ClubPROLivestreamMenu Individual retirement account assets dwarf those of 401(k) plans. IRAs held about $19.2 trillion at the end of 2025, while 401(k)s held $10.1 trillion, according to the Investment Company Institute, a trade group representing asset managers. Yet, 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 repository of "rollovers" from workplace retirement plans, experts said. In other words, they capture money that originated in 401(k)s and similar plans but that investors subsequently moved at a legally specified point in time, such as when they changed jobs or retired. Nearly 6 million people rolled money into an IRA in 2023, up from about 4 million in the early 2000s, according to the most recent IRS data. Investors rolled $682 billion into IRAs in 2023 — more than triple the amount from the early aughts. By contrast, they made just $89 billion of direct IRA contributions in 2023. "People by and large don't save money in IRAs at all," said David Blanchett, a certified financial planner and head of retirement research for Prudential Financial. "All the money in IRAs is coming from rollovers." Rollover decisions are perhaps one of the most important financial choices many households will make, often involving hundreds of thousands of dollars or more, experts said. Cerulli Associates, a market research firm, estimates investors will roll over $941 billion to IRAs in 2026 and about $1.3 trillion in 2031. That growth comes as the financial industry defeated a Biden-era investor protection rule in federal court. The Trump administration declined to keep defending the rule, which sought to raise investment advice standards for insurance agents and others who solicit rollovers from retirement savers. Demographics play the largest role in the growth of rollover assets, experts said. Baby boomers are hitting traditional retirement age at a historic pace. More than 11,000 Americans per day — more than 4 million per year — are turning 65 years old, according to the Alliance for Lifetime Income, an insurance industry trade group. Many investors choose to roll their money from a workplace plan into an IRA upon retirement, experts said. This is partly attributable to psychology, as workers who retire from an employer no longer wish to park their assets in the company 401(k), said Philip Chao, CFP, the 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. Traditional — or, pretax — IRAs gained roughly $5.2 trillion of total assets from 2020 to 2025, according to Cerulli. Of that, rollovers accounted for $3.8 trillion, while contributions added just $119 billion, it said. Of the remainder, market appreciation added $3.9 trillion, while investors withdrew about $2.5 trillion. Rollovers aren't necessarily appropriate for everyone, experts said. In fact, many Americans would generally be better off if they kept at least some of their money in their 401(k) plan after retirement, because they can generally access investments and certain services at "very competitive" prices relative to IRAs, Blanchett said. Once investors move their money from a 401(k) to an IRA, it's not possible to get back in, Blanchett said. Additionally, investors generally have greater legal protections in a 401(k) plan, Chao said. Employers have a legal obligation, known as a "fiduciary" duty, to serve the best interests of the workers who participate in their company retirement plan. However, that same duty may not exist outside the 401(k) plan context, depending on the scenario, experts said. Some observers are concerned that this leads certain financial salespeople to recommend rollovers when it's not in investors' best interest to do so. "So many people become victims of overzealous salespeople," Chao said. However, IRAs may make more sense in other scenarios, experts said. For instance, not all companies or 401(k) administrators allow for flexible withdrawals from a 401(k), making it difficult to draw money on an ad-hoc basis from such retirement plans, experts said. Got a confidential news tip? We want to hear from you. Sign up for free newsletters and get more CNBC delivered to your inbox Get this delivered to your inbox, and more info about our products and services. © 2026 Versant Media, LLC. All Rights Reserved. A Versant Media Company. Data is a real-time snapshot *Data is delayed at least 15 minutes. Global Business and Financial News, Stock Quotes, and Market Data and Analysis.

IRAs hold trillions more than 401(k) plans — yet people hardly save in them

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