A recent report by Hewitt Associates has found that while the majority of employers have been slow to adopt Roth 401(k) plans, a number of employees will indeed sign up for the Roth 401(k) when it's offered–particularly those workers who are younger and newly enrolling in a retirement plan.
Hewitt looked at more than 60,000 employees at companies that offered Roth 401(k) plans and found the average adoption rate was 8% after just three months of availability. About 14% of participants in their 20s elected the Roth 401(k) when it was available, and nearly a quarter (24.7 percent) of employees who were newly enrolling in the 401(k) plan chose the Roth 401(k) option, the study found. Hewitt's study also found that when a Roth 401(k) was offered, the average contribution rate for newly eligible employees was approximately the same amount as it was before the Roth 401(k) was available.
Lori Lucas, director of retirement research at Hewitt Associates, says "many companies have been hesitant to offer Roth 401(k)s for a number of reasons, including concerns over whether employees would use them and whether Roth 401(k)s might actually result in reduced overall contribution rates." However, she says, "our early research on the Roth 401(k) shows no notable difference in the participation and contribution rates of employees choosing to contribute to the Roth 401(k) versus a pretax 401(k)."
