Nearly 54% of current retirees or departing participants who have assets in employer-sponsored defined contribution plans took cash payments, according to a new study by Cerulli Associates.
Participants with larger account balances are more likely to roll their money into an IRA than those with smaller balances. As a result, 37% of lump-sum distributions were rolled over to IRAs, which accounted for more than 77% of total IRA assets. Total IRA rollover assets have grown to $2.47 trillion in 1999, from $20 billion in 1980. This emerging IRA rollover market, combined with the increasing need for retirees to secure lifetime income, will push annuity sales to higher levels, Cerulli predicted. The consulting firm estimates that IRA assets in annuities will grow to $690 billion by 2010, with the portion of these assets from rollovers growing to 78% from 60% over the same time period.