Jul 2, 2026
Most Americans build retirement savings through workplace plans like 401(k)s. But thanks largely to rollovers, IRAs now hold more total retirement assets than 401(k)s do.
All told, IRAs hold approximately $19.2 trillion, about equal to Europe’s total gross domestic product, through 2025. In contrast, 401(K) plans total $10.1 billion in the same time period.
Advertisement
Why the disparity? For starters, workplace retirement plan managers often use IRAs as a parking spot for rollovers when career changes or retirements trigger account transfers. LIMRA estimates roughly $855 billion was rolled over from workplace retirement plans into IRAs in 2025 alone, with annual rollover activity projected to exceed $1 trillion by 2030.
Thanks for subscribing!
Read the best of Moneywise in 5 minutes or less.
By signing up, you accept Moneywise Terms of Use, Subscription Agreement, and Privacy Policy.
Yet there are other reasons why Americans shun IRAs, and it’s a longer list than you may think. Here’s a snapshot.
Retirement savers may view IRAs as limited
“First, many Americans don’t have the saving capacity to contribute to both a workplace retirement plan and an IRA,” Jason Dall’Acqua, founder and financial advisor at Crest Wealth Advisors, told Moneywise. “A workplace plan is typically going to be the first place they save.”
Additionally, Roth IRAs have income limits, as do traditional IRAs for individuals with access to a workplace retirement plan. “That limits access to those who may have the cash flow to utilize these accounts,” Dall’Acqua noted.
There’s also a lack of financial education in the country since retirement plan vehicles largely aren’t taught in U.S. schools. “So, many people may not be aware of the savings options available to them, and the pros and cons of each option,” Dall’Acqua added.
US consumers lean toward 401(k)’s because of more options
There are understandable reasons why Americans also lean toward 401(k) plans.
“Two compelling arguments to keep funds within a 401(k) would be the Rule of 55 and the ability to borrow against the account,” Adam Vega, managing partner at Avance Private Wealth Management, told Moneywise.
For example, someone who retires from a company with an employer 401(k) has the ability to take distributions as early as 55, compared to 59.5 for IRAs — penalty free. “For someone who plans to retire early, that is significant,” Vega said. “We'll often suggest keeping funds in a 401(k) for this reason alone, just to offer that option.”
Vega said that while his team rarely suggests taking loans from a 401(k), the ability to borrow funds against a 401(k) is a nice feature to have, as it's hard to predict what the future holds. “Rolling funds out early, you completely lose that ability assuming you plan to remain employed,” he added.
Investors deem IRAs as a ‘Plan B’
Other investing experts agree, adding that consumers choose 401(k) plans over IRAs for operational reasons.
Advertisement
“Most Americans save for retirement through employer-sponsored 401(k) plans, which offer automatic payroll deductions, employer matching contributions, and often automatic enrollment,” Colleen Carmitchel, tax advisor and financial planner at Moneta, told Moneywise.
In contrast, Carmitchel said IRAs require individuals to proactively make contributions each year, and their annual contribution limits are significantly lower than those for 401(k) plans. “As a result, many Americans view IRAs as a supplemental retirement savings vehicle or a destination for rollover assets rather than a primary retirement savings account,” she added.
Must Read
- The ultra-rich use these 5 real estate strategies to build wealth while they sleep — you can start with just $100
- Here’s the average income of Americans by age in 2026. Are you keeping up or falling behind?
- Insurance companies profit most from drivers who auto-renew without shopping around. Comparing 100+ quotes takes 2 minutes and costs nothing
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
IRAs should continue to dominate with plan rollovers
Having carved a huge role in the retirement plan rollover market, IRAs will play a key long-term savings role for Americans, but savers should know a few things about IRAs first.
“As IRA rollover activity continues to grow, ensuring that recommendations are made in the investor's best interest is increasingly important,” Carmitchel said.
For instance, before transferring retirement assets, investors should ask how their advisor is compensated, request a side-by-side comparison of fees, investment options, and services, and understand why a rollover is recommended rather than leaving assets in the existing plan. “Working with a fiduciary advisor and carefully evaluating the costs, protections, and benefits of each option can help reduce the risk of conflicted advice and lead to better long-term outcomes,” Carmitchel advised.
Future changes to federal retirement policy could also make IRAs more attractive as primary savings vehicles rather than simply destinations for rollover assets. Financial planners say reforms that make it easier to contribute to IRAs through payroll deductions, raise contribution limits or simplify eligibility rules could encourage more Americans to use them regularly.
Advertisement
“The most impactful reforms would make IRA contributions as simple and automatic as saving through a workplace retirement plan,” Carmitchel said. “Allowing payroll deductions into IRAs, increasing contribution limits, and simplifying eligibility and contribution rules would encourage greater participation.”
Carmitchel also said Congress could encourage more IRA participation by expanding tax incentives. One example would be strengthening the Saver’s Credit by replacing it with or supplementing it with a direct government matching contribution for lower-income workers. “Doing so could further encourage Americans to use IRAs as active retirement savings vehicles rather than primarily as rollover accounts,” she added.
Meanwhile, leaving assets in a former employer's 401(k) can be the better long-term strategy for investors, particularly when the plan offers low-cost institutional investment options, strong fiduciary oversight, and lower overall expenses than comparable IRA investments.
“A 401(k) may also provide stronger federal creditor protections under ERISA, preserve access to features such as the age 55 penalty-free withdrawal rule, or include investment options that are not available in IRAs,” Carmitchel noted.
Rather than automatically rolling assets into an IRA, “investors should compare the costs, investment choices, legal protections, and plan features to determine which option best supports their long-term financial goals,” she advised.
You May Also Like
- JP Morgan sees gold hitting $6,000/oz before 2027 — and a Gold IRA lets you hold the physical metal while deferring the tax bill. Get your free guide from Priority Gold
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and the simple steps to fix it ASAP
- Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how
- Millionaires under 43 are reshaping investing — just 25% of their portfolios are in stocks. Here’s where their money is going
A former Wall Street bond trader, Brian O'Connell is the author of two best-selling books: “The 401k Millionaire” and “CNBC’s Creating Wealth.” His work is featured on national finance and business platforms like TheStreet.com, CBS News, CNN, The Wall Street Journal and Forbes.
