The Roth 401(k) came about at the beginning of this year. However, it cannot yet tout widespread popularity, as many companies have opted not to offer it. However, General Motors Corp has announced its plans to offer it and will be the first major employer to do so, and as a result, GM's decision may boost the popularity of the newest retirement savings product, The Wall Street Journal reports.
"When larger companies start adding features like a Roth, the smaller players feel they must follow in order to stay competitive," said Chris Bowman, vice president of retirement and investor services at Principal Financial Group, a large retirement savings plan administrator.
Employees at other companies, such as A.G. Edwards, have also shown interest in the Roth 401(k).
Vanguard introduced the Roth 401(k) at the beginning of this year and 15% of the company's workforce enrolled into the plan by the middle of February, which shows the potential this product has to succeed.
And why shouldn't it succeed? It offers advantages to both low tax bracket workers and highly paid workers because they are paying taxes on their contributions today rather than later, and will be able to withdraw the money tax free.
Hewitt Associates is also offering Roth 401(k)s and already has 6% of its employees enrolled.