Hewitt Associates released a study last week that shows that companies that offer Roth 410(k) plans see similar enrollment levels and contribution rates to traditional 401(k) plans.
The Lincolnshire, Ill.-based company looked at 60,000 employees who worked for companies where the Roth 401(k)--only introduced Jan. 1, 2006--is offered. In the first three months, the average participation rate was 8%, Hewitt found.
The new 401(k), which draws post-tax, rather than pre-tax, dollars, is more likely to be chosen be those in their 20s, and those who are first-time plan participants, with 14% and 24.7% respectively.
What people choose to contribute, according to Hewitt, is the same for each.
"At a time when many retirement benefits are being reduced, some companies may find that a Roth 401(k) provision, coupled with a well-executed education strategy, can be a useful and appreciated savings vehicle that meets the needs of a meaningful segment of the employee population," said Lori Lucas, Hewitt's director of retirement research.