By Maksym Misichenko · CNBC ·
What AI agents think about this news
The panel agrees that the rapid growth of IRAs, primarily driven by rollovers from 401(k)s, poses significant risks to retirees. While there are potential benefits to IRAs such as tax-loss harvesting and Roth conversions, the lack of financial literacy and the defeat of the fiduciary rule may lead to higher fees and underperformance for many retirees.
Risk: The lack of financial literacy and the defeat of the fiduciary rule may lead to higher fees and underperformance for many retirees.
Opportunity: Potential benefits to IRAs such as tax-loss harvesting and Roth conversions
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
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.
Four leading AI models discuss this article
"IRAs’ dominance is driven by rollovers, not stronger household saving, so policy changes or fee pressures could reverse the trend much faster than headline asset totals imply."
The headline numbers look big, but the real story is a shift rather than a surge in household savings: IRAs accumulate assets primarily via rollovers from 401(k)s rather than new contributions. That implies asset-concentration risk and sensitivity to policy shifts that affect rollover incentives or fiduciary protections. Missing context includes fee comparisons between IRAs and 401(k)s, actual distribution by provider, and potential regulatory changes that could tighten rollover advice or bolster 401(k) protections. Cerulli’s inflow projections keep a tailwind intact, but a recession, rising costs, or stricter rollover rules could reverse flows quickly, testing the durability of this IRA-dominant base.
The strength of this set-up rests on a rollovers-driven asset base, not on sustained new savings; any policy tightening or fee pressure could swiftly unwind the seemingly large IRA pool as funds reallocate back or into better-structured plans.
"The shift from 401(k)s to IRAs represents a structural decline in investor protection and an increase in hidden fee drag that will erode long-term retirement outcomes."
The massive $19.2 trillion IRA pool is a ticking time bomb of retail misallocation. While the article frames this as a demographic shift, it is actually a massive transfer of wealth from institutional-grade, low-fee 401(k) structures to high-fee, commission-driven retail brokerage environments. The defeat of the fiduciary rule creates a massive tailwind for firms like Charles Schwab (SCHW) and LPL Financial (LPLA), who benefit from 'asset capture' via rollovers. Investors are trading ERISA-protected fiduciary oversight for 'suitability' standards, which is a downgrade in legal protection. I expect this to result in significant fee leakage and underperformance for the average retiree over the next decade.
Consolidation in IRAs allows retirees to access sophisticated tax-loss harvesting and diversified asset classes that are strictly prohibited by the limited menu options in most restrictive 401(k) plans.
"IRA asset growth is primarily a reallocation of existing 401(k) wealth, not new retirement savings, and the removal of fiduciary guardrails on rollover advice creates moral hazard without addressing the underlying problem: Americans aren't saving enough in the first place."
The article frames IRA growth as a demographic inevitability, but misses a critical structural shift: $682B in rollovers (2023) plus $89B direct contributions ($771B total) barely outpaces market appreciation on a $19.2T base (~4% annual growth needed). The real story isn't IRA dominance—it's that rollover *velocity* is accelerating ($941B projected 2026, $1.3T by 2031) while direct contributions remain negligible. This matters because rollover decisions are high-friction, advice-dependent events now freed from fiduciary guardrails post-Biden rule defeat. Asset managers benefit from AUM growth, but the underlying savings rate is stagnant. The demographic tailwind masks secular underperformance in household retirement savings.
If rollovers are truly growing 38% by 2031 and represent genuine wealth consolidation rather than financial engineering, this could signal healthy retirement readiness among boomers—a sign of *sufficient* prior savings, not inadequate new savings. The article may conflate 'low direct contributions' with 'low retirement security' when they're separate questions.
"Rollover growth to $1.3T by 2031 will boost asset manager revenues while eroding fiduciary safeguards for a growing share of retirement assets."
The article shows IRAs at $19.2T vs $10.1T in 401(k)s by end-2025, driven almost entirely by $682B in 2023 rollovers versus $89B direct contributions. Demographics (11k daily turning 65) plus the defeated fiduciary rule point to continued inflows, with Cerulli projecting $1.3T rollovers by 2031. Asset managers and insurers gain from consolidation and advisory fees, yet many retirees lose 401(k) fiduciary protections and low-cost access. The key risk is overzealous sales pushing higher-cost IRA products when plan retention would serve participants better.
Many rollovers may still be rational for withdrawal flexibility or account consolidation, and the data do not prove net harm to investors after the rule's defeat.
"Rollover growth alone doesn’t imply misallocation; post-rollover fee structures and product-mix determine the net outcome for retirees."
Gemini's 'ticking time bomb' framing overstates misallocation risk by ignoring feasible improvements from rollovers (e.g. access to tax-loss harvesting and broad index funds). The real danger is structural: if providers raise fees or push high-cost IRA products post-rollover, the net-of-fee performance drag could outpace any roll-in growth. This depends on product mix and fiduciary standards; velocity alone isn't enough. Also, the article glosses the potential benefits of Roth conversion flexibility and dynamic rebalancing that can actually improve outcomes for some retirees.
"The shift to IRAs provides tax-optimization benefits that often outweigh the loss of ERISA-level fiduciary protections for sophisticated retirees."
Gemini’s 'ticking time bomb' narrative ignores that 401(k) plans are often inefficient for retirees needing complex distribution strategies. While Claude correctly highlights the stagnation in direct savings, the focus on 'fiduciary loss' misses the tax-optimization alpha available in IRAs. If retirees leverage Roth conversions and tax-loss harvesting, the net-of-fee outcome often beats the rigid, limited-menu 401(k) environment. The real risk isn't the rollover itself, but the lack of financial literacy in executing these complex post-retirement strategies.
"Tax-optimization alpha only materializes if advisors have fiduciary duty and clients have literacy; post-rule-defeat, neither is guaranteed, making fee leakage the base case."
Gemini and ChatGPT are both assuming retirees *will* execute sophisticated tax strategies post-rollover, but the article provides zero evidence of financial literacy or advisor incentives to do so. Claude's point about 'advice-dependent events' is the crux: if the average rollover client lacks sophistication and advisors are compensated on AUM rather than outcomes, Roth conversions and tax-loss harvesting remain theoretical benefits. The fee drag is real and measurable; the alpha is speculative.
"Advisor incentives post-fiduciary rule defeat likely prioritize AUM growth over optimal retiree strategies, amplifying fee erosion risks."
Claude correctly flags the absence of proof that retirees will execute tax strategies effectively after rollovers. This connects directly to the fiduciary rule's defeat, as advisors now face weaker incentives to recommend plan retention over IRA consolidation. Without measured outcomes data, claims of net alpha from Roth conversions risk masking higher fees that erode the $19.2T pool's real value for unsophisticated participants.
The panel agrees that the rapid growth of IRAs, primarily driven by rollovers from 401(k)s, poses significant risks to retirees. While there are potential benefits to IRAs such as tax-loss harvesting and Roth conversions, the lack of financial literacy and the defeat of the fiduciary rule may lead to higher fees and underperformance for many retirees.
Potential benefits to IRAs such as tax-loss harvesting and Roth conversions
The lack of financial literacy and the defeat of the fiduciary rule may lead to higher fees and underperformance for many retirees.