Roth 401(k) more Popular with New Participants

According to a press release, almost a quarter (24.7%) of new enrollees chose the Roth option, compared to the average Roth adoption rate of 8% for all respondents. The survey of more than 60,000 employees found the Roth uptake was more popular with participants in their 20s (14%) than with any other age group. Only 4% of workers age 50 to 59 elected to participate in a Roth 401(k) plan.

About 7% of workers who were already participating in their company’s 401(k) plan chose the Roth option when it was made available, the release said. Lori Lucas, director of retirement research at Hewitt Associates, said the percentage was a significant number considering the typical inertia of participants, according to the release.

Additionally, Hewitt’s study found that participants who changed their election to the Roth 401(k) when it became available contributed on average almost three percentage points more in the aggregate (11.6%) than employees not electing the Roth 401(k) plan (8.8%). Lucas said Hewitt’s research dispels employers’ concern that adding the Roth option to plans would drive down overall contribution rates.

Additional findings of Hewitt’s study include:

• A higher percentage of non-highly compensated employees elected the Roth option than did highly compensated employees
• 9.4% of male employees invested in a Roth 401(k), compared to 5.5% of females employees.