The Roth 401(k) on the Rise

The Roth 401(k) continues to gain steady adoption as a way for working Americans to defer in workplace retirement plans. According to Fidelity’s Building Financial Futures report, the percentage of Fidelity’s retirement
plans offering a Roth 401(k) (which is contributed from an employee’s salary on an after-tax basis) has increased by 32 percent in the past five years and is becoming increasingly popular with younger participants.
Here are some additional insights from the report:

• The percentage of workplace retirement plans incorporating a Roth 401(k) deferral option into their plans offering is 75.2 percent, an all-time high.
  
• Millennials have increased their Roth 401(k) deferrals from 10 percent to 16 percent in the past 10 years, making them the generation to most take advantage of a Roth 401(k) option.
  
• In 2021, 26 percent of plans offer employees the ability to convert pretax assets to a Roth, twice the number who offered that option in 2016.
  

Does your company’s retirement plan offer a Roth 401(k) option? If not, contact your retirement plan advisor
to learn about how it can benefit your plan and employees.