Half of Americans Do This Before Rolling Over an IRA

Americans are rolling over their defined-contribution plans like 401(k)s into IRAs in big numbers. But before doing so, 50% are discussing the move with a financial adviser, according to LIMRA’s Secure Retirement Institute.

Last year, IRA rollovers jumped to $623 billion, up from $565 billion in 2019. SRI says the increase largely was due to pandemic-related job disruption.

Many workers — about 6 in 10 of those ages 40 to 75 — roll over, or transfer, their defined-contribution plan balances into an IRA when they separate from an employer.

Rolling over a plan balance can be a huge financial transaction, particularly if you have built up a large sum of money in your plan. For that reason, half of all people who contemplate moving money from a defined-contribution plan consult with a financial pro before doing so.

And it turns out they probably are glad they did: 51% said that a financial professional had the greatest influence over their decision to roll over the balance of their defined-contribution plan.

Older workers were particularly likely to seek out professional advice, with 56% of individuals between the ages of 65 and 75 reporting that they asked for expert help.

The rise in IRA rollovers is expected to continue. SRI forecasts that the amount annually rolled over will top $760 billion within the next five years.

However, not everybody who leaves a job moves the money they have accumulated out of their defined-contribution plan.

In a press release, Drew Maresca, research director, retirement research at LIMRA, says:

“Twenty-six percent of investors who left an employer within the past two years took no action with their money, keeping the entire balance in the [defined-contribution] plan. These accounts represent future money in motion, as investors may decide to cash out, roll over, transfer, or begin taking income from the account at any point.”

If you are considering an IRA rollover, seeking expert help can be wise. So, stop by the Money Talks News’ Solutions Center and search for the perfect financial adviser.