This year more employers expect to introduce Roth features to their defined contribution plans, according to a recent survey by Aon Hewitt.
Forty-nine percent of respondents do not offer Roth provisions. Among respondents that don’t offer Roth features, 29 percent say they’re very or somewhat likely to add this feature in the next 12 months, and of those, 76 percent say the anticipate adding Roth contribution as well as in-plan conversion features.
"While employers have steadily been adopting Roth features in recent years, the new law along with a better understanding of Roth by both participants and companies will encourage more plan sponsors to add these options in the near-term," says Patti Balthazor Bjork, director of retirement research at Aon Hewitt.
For those that already have a Roth contribution option, they’re likely to allow in-plan conversions to Roth accounts. In fact, among respondents that allow Roth contributions but don’t offer in-plan conversions, 53 percent say they’re very or somewhat likely to add this option in the next year.
Meanwhile, among respondents that already allow Roth contributions and in-plan conversions, 79 percent say they’re very or somewhat likely to increase eligibility for in-plan conversions and allow them for amounts that were not distributable.
“The new rules open the door for employers to allow expanded in-plan conversions, but it's not a requirement,” Bjork says. “However, it makes the Roth conversions more attractive for employees, so there will likely be increased interest and incentive for employers to offer them.”