IRA rollovers from DC plans to hit $1.15T by 2030, LIMRA says

IRA rollovers from defined contribution plans are set to surge over the next five years, with LIMRA projecting the market will reach $1.15 trillion by 2030 – a 34% increase from this year’s estimated $855 billion in retail rollover activity.

The anticipated growth from new LIMRA research highlights the evolving dynamics of the retirement savings landscape, where IRAs now represent the largest segment.

The Investment Company Institute's latest quarterly reading of retirement assets estimated IRAs held $16.8 trillion by the end of the first quarter, followed by $12.2 trillion in DC plans. Private defined benefit plans, government DB plans, and annuity reserves held $3.2 trillion, $8.9 trillion, and $2.4 trillion, respectively.

According to LIMRA's new analysis, rollovers from workplace retirement plans remain the dominant source of IRA funding, accounting for 97% of traditional IRA inflows in 2022.

The expansion is closely tied to workforce trends, including job turnover and retirements. LIMRA estimates that between 60 and 70 million workers leave their employers each year, unlocking access to their defined contribution plan assets.

Coverage has also broadened, with the number of private-sector DC plans increasing nearly 20% over the past decade. More than 750,000 plans are now available, covering as many as 92 million workers.

Participation rates have climbed as well, driven by auto-enrollment and re-enrollment features. For larger plans, participation rose from 58% in 2010 to 72% in 2024, while smaller plans saw an increase from 51% to 55%. The average IRA rollover amount for individuals ages fifty to seventy-four has more than doubled since 2007, reaching over $220,000 in 2023 and 2024.

The LIMRA study identifies four main factors influencing rollover decisions: control over assets, the pursuit of better returns or more investment options, consolidation for easier management, and convenience, such as user-friendly digital tools or accessible customer service. While fees were less frequently cited, they remain a consideration for many investors.

LIMRA’s research also indicates two-thirds (67%) of investors start considering their rollover options before leaving their employer, with most decisions made about three months prior to departure. Those with higher plan balances, greater household assets, and who work with financial professionals are more likely to make these decisions early.

“For these individuals, in particular, control and choice are major motivators,” Matt Drinkwater, corporate vice president, LIMRA annuity and retirement income research, said in the report. “Our recommendation is that any asset capture strategy should emphasize that sort of empowerment message of control — otherwise they may miss those very attractive potential customers.”

Despite a growing need for guaranteed lifetime income, less than 10% of investors and defined contribution plan assets are being rolled over into annuities. LIMRA sees a potential turning point, however, as in-plan annuities gain ground as an option.

“As more workers approach retirement without a pension and more opportunities are available to invest in an annuity within their defined contribution plans, we could see more retired participants opt to keep their money in the plan and take distributions from that instead of rolling it out into an IRA,” said Bryan Hodgens, senior vice president and head of LIMRA research.