Over the past year, $489 billion was eligible for rollover and $245 billion was actually moved into IRAs.  Spectrem Group estimates that the amounts eligible for and transferred to IRA rollover accounts will increase at 10-12% annually over the next five years. 

Generation X is the least likely to roll their plan balance into an IRA and the most likely to take a taxable withdrawal. Both Baby Boomers and the World War II generation move about half of their retirement plan assets into personal IRAs. The World War II generation also directed 18% of assets into periodic income arrangements. Baby Boomer are more likely than the older group to leave their money in the previous employer’s plan or transfer it into the plan at their new employer.  Generation X is the least likely to move their money into an IRA but the most likely to leave it in the previous employer’s plan or transfer it into the plan at their new employer. They are also the most likely to take some or all in the form of a taxable withdrawal.

The decline in the willingness to leave retirement money in the plan at a former employer appears permanent. Prior to market downturn and corporate scandals of 2000-2002, almost one-quarter of individuals typically left their retirement account balance in the previous employer’s plan when they changed jobs or retired.  In 2004 this proportion dropped markedly to just 15% where it has stayed.  HNW Investors recognize the importance of their retirement savings and do not want to take the change of losing some or all of it if problems arise with their former employer. Those still opting to leave the money behind when they leave the company are more likely to be those with smaller balances, that is, the proportion of assets left behind is less than the proportion of people making this choice.

Webinar: Capturing the IRA Rollover 

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