How badly do providers want IRA rollover business? So badly that at least one is willing to pay for it.
Ally Bank, the banking subsidiary of Ally Financial, announced it will pay $100 to $500 to consumers who rollover outside funds to one of their IRA products.
From the first of the New Year through the end of May 2015, deposits of $25,000 to $49,999 will be paid $100, a deposit up to $200,000 will be paid $250, and deposits of more than that will be paid $500.
This isn’t the first time Ally has dangled cash incentives to lure retirement assets.
“The strong success of our IRA bonus offered to consumers earlier this year demonstrated that many people value the risk-free stability of using CDs and savings accounts for their retirement nest egg,” said Diane Morais, Ally Bank Deposits and Line of Business Integration Executive.
Competition for rollover business is expected to ratchet up as more boomers leave enter retirement.
But so far, more assets are remaining in plan than some expected.
Cerulli Associates found that in 2013, $720 billion worth of 401(k) assets eligible for distribution remained in the sponsors’ plans. About $324 billion rolled over in 2013.
The safe bet is that number will increase.
As the first full wave of defined contribution plan beneficiaries prepares to retire, Cerulli estimates those between ages 55 and 69 hold $15.7 trillion of investable assets–$7 trillion of which is in defined contribution plans or IRAs.
About 70 percent of rollover assets in 2013 went to providers and advisors with existing client relationships, suggesting how challenging it will be to capture new business from baby boomers as they retire.