For decades, individual retirement accounts have been used primarily by wealthier households as a way to roll over funds from employer-sponsored 401(k) plans.
But a new study from the Center for Retirement Research at Boston College suggests that the landscape of IRA contributors is shifting – though not entirely in the way policymakers may have intended.
The study published Tuesday pointed to two forces reshaping IRA participation: state-run auto-IRA programs, which automatically enroll workers without employer-sponsored plans, and the rise of fintech platforms that have made investing in retirement accounts as easy as tapping a smartphone. Together, these trends appear to have expanded the pool of savers, though not always among the groups that need it most.
“If IRA contributions have increased and that increase is driven by auto-IRA programs, it would mean that IRAs are now fulfilling their original intent of providing retirement savings for the uncovered,” the report stated. “If the increase is driven by fintech platforms, popular among the young, higher-income, and tech-savvy, it would mean that IRAs are still mainly a vehicle for those who already have savings to gain more tax advantages.”
Meanwhile, state-sponsored auto-IRA programs have gained momentum over the past five years, the study noted, with 11 states now offering mandatory programs. These programs require businesses that do not provide retirement plans to enroll employees in a Roth IRA, deducting contributions directly from their paychecks.
The number of auto-IRA accounts has grown nearly twentyfold since 2019, reaching 965,000 in 2024. But with just $1.8 billion in total assets – compared to the trillions held in traditional retirement accounts – the impact remains relatively minute.
As of January 2025, a total of $2.24 billion have been contributed to state auto-IRAs, according to data from the Georgetown University Center for Retirement Initiatives.
Fintech companies, on the other hand, have aggressively marketed IRAs to a different group of savers. Platforms like Robinhood and Sofi have introduced bonuses for rolling over or contributing to IRAs, leading to a surge in account openings. Robinhood alone reported 1.2 million IRA accounts by the end of 2024, with assets totaling $13.1 billion.
Aside from Robinhood and Sofi, the field of heavy-hitters offering IRAs includes Betterment, Fidelity, Acorns, and ETrade.
The report finds that fintech-driven contributions are overwhelmingly coming from younger, high-income workers. The percentage of IRA contributors under 40 increased from 28 percent in 2016 to 41 percent in 2022, but the bulk of that growth occurred among those in the top third of the income distribution. Many of these new contributors already have access to a 401(k) or other employer-sponsored plan.
“The main action, though, seems to have been spurred by fintech, which appears to have sharply increased contributions among younger households in the top third of the income distribution who already have a 401(k)-type plan,” the report states. “Thus, IRAs remain primarily another tax-advantaged saving option for those with existing retirement assets rather than a mechanism for increasing coverage.”
That raises a fundamental question: Are fintech platforms making it easier for people to save, or are they simply giving wealthier households another opening to take advantage of tax breaks?
By contrast, the researchers found auto-IRAs have had a measurable, if modest, effect on low-income participation. The percentage of IRA contributors in the lowest third of the income distribution increased from five percent to nine percent between 2016 and 2022, a shift that researchers attribute in part to auto-IRA programs. According to research by the Pew Charitable Trusts, there were more than 800,000 workers participating in auto-IRA programs by the end of 2023, and those using auto-IRAs kick in a modest $165 per month on average.
While auto-IRAs have seen bipartisan support over the years, these state-run accounts are still relatively new, which calls their long-term impact into question.
"The bottom line seems to be that if technology makes it really easy to contribute to tax-advantaged savings accounts, the tech-savvy with money will take advantage of the opportunity," the study said.
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