PSCA Study Finds Roth Usage Doubled in Past Decade
CHICAGO, IL, March 12, 2018 -- Roth availability doubled in the last decade according to the Plan Sponsor Council of America's (PSCA) 60th Annual Survey of Profit Sharing and 401k Plans. PSCA, part of the American Retirement Association, found Roth was offered in 63.1 percent of plans in 2016 compared to 30.3 percent in 2007.
The Survey found that 7.2 percent of plans added Roth as an option in 2016, with the largest increase at 11.2 percent for plans with more than 5,000 participants.
Of the eligible employees that made contributions to a plan in 2016, 18.1 percent made Roth contributions. Interestingly, the highest percentage of Roth contributors comes from the smallest plan group - plans with 1-49 participants have an average of 29.2 percent of eligible employees making Roth contributions.
Roth deferrals are among the top six behaviors that companies monitor. According to the survey, 21 percent of all plans monitor investments of Roth deferrals.
"In the 12 years since Roth became available as an option where you already offer a 401k or 403b with pre-tax contributions, Roth features have demonstrated their value," said PSCA Executive Director Jack Towarnicky.
According to Towarnicky, there are some situations in which Roth contributions might be preferable to pre-tax contributions. Some workers:
PSCA's 60th Annual Survey reflects the 2016 plan-year experience of 590 DC plan sponsors. The full survey is available to order as a hard-copy bound book or a PDF. It contains 182 tables of data covering topics such as automatic enrollment, employee eligibility, and investment advice.
About the Plan Sponsor Council of America
The Plan Sponsor Council of America (PSCA) is a diverse, collaborative community of employee benefit plan sponsors, working together on behalf of millions of employees to solve real problems, create positive change, and expand on the success of the employer-sponsored retirement system. With members representing employers of all sizes, we offer a forum for comprehensive dialogue. By sharing our collective knowledge and experience as plan sponsors, PSCA also serves as a resource to policymakers, the media and other stakeholders as part of our commitment to improving retirement security for millions of Americans. For more information, visit www.psca.org.
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