Where Do you Go for Financial Advice?
The option is just that: an option. Employers are not required to make a Roth 401(k) option available. However, in view of the media's coverage of the option, much of which has been positive, you will want to have in mind a thoughtful response for whatever decision you make regarding the Roth 401(k). As for what other plan sponsors are considering, one of our weekly NewsDash polls taken in mid-March found that nearly a quarter were "intrigued, but waiting for the final regulations to decide," while another 22% said they definitely were planning to incorporate the option. Still, about 15% said they were convinced the benefits will not outweigh the costs (and, for many, the complexity) of implementing the new accounts, and about 12% said they still were confused as to what the benefits of a Roth 401(k) account might actually be. However, a less enthusiastic three out of 10 large company respondents said they were very or somewhat likely to add Roth 401(k) accounts to their 401(k) plans when permissible on January 1, according to a study by Hewitt Associates published in June. This month's Know How attempts to outline some of the pros and cons of the option for participants, while providing a frame of reference with current 401(k) and Roth IRA choices. As always, we look forward to your comments and suggestions. —Nevin Adams