Get more! Sign up for PLANSPONSOR newsletters.
Plan Sponsors See Struggles if Moving to Roth-Only Retirement Savings
Seventy-eight percent of plan sponsors think that if 401(k) plans moved to Roth-only participant contributions, it would negatively impact participation, the Committee on Investment of Employee Benefit Assets Inc. (CIEBA) found in a membership survey. No members thought it would have a positive impact.
Eighty-two percent said they thought participants would view
a change to a Roth-only system very or somewhat negatively.
Sixty-one percent of CIEBA members said they would not be comfortable
converting their participants who make pre-tax deferrals into participants who
make Roth deferrals without affirmative consent elections. Forty percent of
CIEBA members said it would be very or extremely difficult to explain the
Rothification of 401(k) plans to participants.
Today, 26% of CIEBA members don’t offer a Roth option to their participants. Even so, a movement to an all-Roth
platform would mean millions of participants would have to learn about this
option, CIEBA says. That is because even when a Roth option is available, CIEBA says, 90% of the dollars deferred
in the plans managed by CIEBA members are made through traditional pre-tax
deferrals.
Despite their concerns, 56% of respondents said if the system was switched to Roth-only they would be very unlikely to consider eliminating elective deferrals from their plans.