A news release from PSCA, an industry group, found that 17.4% of employers were going the Roth feature route while 35.1% don’t have current plans to do so. Four in 10 aren’t sure while the remaining respondents hadn’t given the issue any thought either way.
Among companies planning to add a Roth feature, 41.9%
intend to make the move as of January 1, 2006, 54.1% plan
to do so later in 2006 and 4.1% say they will add the
feature in 2007 or later.
Employers turning away from the Roth provision said their top reasons include additional administrative burden (64.4%), concerns about additional participant education (58.4%), lack of participant demand (55.7%), concerns about the sunset of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) (41.6%), and insufficient regulatory clarification (38.9%).
EGTRRA includes a provision enabling qualified 401(k) plans to permit plan participants to designate elective deferrals as Roth contributions beginning in 2006. Like contributions made to a Roth IRA, participant contributions to a Roth 401(k) plan are made with after-tax money, and the investment returns on these contributions are tax-free.
The report on the PSCA Roth survey is here . A free registration is required.