The individual retirement account has become the dominant repository of American retirement wealth, holding approximately $19.2 trillion as of year-end 2025, according to data from the Investment Company Institute – nearly double the $10.1 trillion held in 401(k) plans.
But the source of that abundance tells a more complicated story, one with significant implications for advisors who guide clients through job transitions and retirement.
The engine behind IRA growth isn't the steady trickle of annual contributions. It's the flood of money flowing out of workplace plans. Research from Cerulli Associates estimates that investors will roll approximately $941 billion into IRAs in 2026 alone – a figure projected to climb to $1.3 trillion by 2031.
The wave of IRA rollovers is washing over America as Baby Boomers reach traditional retirement age at a historically unprecedented rate. According to one statistic cited by the Alliance for Lifetime Income, more than 11,000 Americans per day are turning 65 in 2026.
The structure of the U.S. retirement system makes large-scale rollovers almost inevitable. Annual IRA contribution limits remain comparatively modest – $7,500 in 2026 – while the assets that accumulate inside 401(k) plans over decades of employment can easily reach hundreds of thousands of dollars. According to the Investment Company Institute, approximately 61% of traditional IRA-owning households hold rollover assets from employer-sponsored plans.
Vanguard's How America Saves 2026 report, which analyzed defined contribution plan behavior across millions of participants, found that 94% of all plan assets available for distribution in 2025 were preserved for retirement – either rolled over to an IRA or another qualified plan, or retained in the former employer's plan. Among participants who actually separated from service in 2025, 36% chose to roll their assets to an IRA or new employer plan – the highest rollover rate recorded in the past decade, according to Vanguard. Only 5% of the assets eligible for distribution were taken as cash.
Vanguard also found that preservation behavior improved with account balance. Seven in 10 participants with balances below $1,000 kept their savings in a tax-deferred account, but once balances exceeded $100,000, nine in 10 participants chose to preserve their assets.
Meanwhile, Fidelity's first-quarter 2026 retirement analysis – drawn from more than 54 million IRA, 401(k), and 403(b) accounts it administers – total IRA contributions surged 29% year-over-year in the first quarter. The number of account holders contributing also reached a record high, up 28% from the same period in 2025.
Roth accounts are driving much of the activity. Of all IRA contributions at Fidelity in Q1, 67% went into Roth IRAs, while Roth conversion transactions climbed 41% year-over-year. Gen Z led IRA growth by age cohort, with total contributions increasing 65% year-over-year, followed by Millennials at 31%.
The average IRA balance at Fidelity stood at $131,380 as of March 31, down 4% from Q4 2025 – reflecting the market volatility of the first quarter – but up 7% from Q1 2025.
"Retirement savers started the year strong with record-high savings rates and contributions, reflecting the long-term approach they're taking with retirement preparedness," said Sharon Brovelli, president of Workplace Investing at Fidelity Investments, in a statement accompanying the data drop.
For advisors, the rollover market represents one of the most consequential touchpoints in a client relationship. The transition from a workplace plan to an IRA is a moment of maximum flexibility. Clients who roll assets into an IRA gain access to a broader universe of investment options and often find it easier to take ad hoc distributions, since many 401(k) plans lack flexible withdrawal features.
Still, IRA rollovers could also be an opening for opportunistic financial professionals, creating a question of investor protection that regulators have wrestled with for years. The Biden administration's fiduciary rule introduced in 2024 – which sought to raise investment advice standards for insurance agents and others who recommend rollovers – was struck down in federal court, and the Department of Labor under the Trump administration declined to defend it. That outcome has renewed scrutiny of rollover recommendations, particularly for clients moving from institutional plans with low-cost investment options into retail IRAs where fees and product selection vary more widely.
There are also technical wrinkles for savers in Roth IRAs. Under current federal tax law, only traditional IRA assets can be rolled over into a new employer's 401(k). Roth dollars that leave a workplace plan effectively become stranded in a Roth IRA, unable to follow the participant into a new employer plan. The Portability Services Network – which includes Fidelity, Vanguard, and Alight Solutions – has flagged this gap as a systemic problem.
On that note, the bipartisan Retirement Rollover Flexibility Act introduced in December proposes to allow up to $7,000 of Roth IRA money to move back into a 401(k), though its prospects in Congress remain uncertain.
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