Individual retirement account rollover contributions are forecasted to increase at a compounded annual growth rate of 5.5 percent over the next five years, reaching nearly $470 billion in 2018, according to a new report.
Cerulli Associates published this finding in “Evolution of the Retirement Investor 2013: Influencing and Addressing Retirement Savings.” The study analyzes the decisions individual investors make regarding retirement savings, rollovers and retirement income.
The report attributes the expected rise in rollover contributions primarily to increased distributions from defined contribution (DC) plans as retirees withdraw accumulated balances in these plans. The report adds that $600 billion of assets eligible for distribution from DC plans remained in-plan in 2012. The amount includes assets eligible from prior years that still remained in-plan.
“Anecdotal evidence suggests that a significant portion of newly rollover-eligible assets actually does roll over in that year,” the report states. “However, it can take up to five years for the remainder of eligible assets to actually move. Thus, a significant opportunity for retail assets is always in place.”
The report notes also that retirement income opportunity (RIO) households — households in which the head of household is age 55 to 69 — have $5.8 trillion in retirement assets. These households hold another $7.7 trillion in investable assets for a total of $13.5 trillion.
More than a quarter of the survey participants (26.9 percent) indicate that the 401(k) provider is their primary source of retirement advice. Another 43.5 percent of participants indicate no source for advice or point to a family member, friend/colleague, their employer or the news as their primary source.