Is a Roth right for employees? More employers apparently think so.
A new survey from the human resources firm Aon Hewitt reveals a rise in the Roth 401(k)’s popularity, with an increasing number of employers planning on adding it to their defined contribution plans in 2013. Surprisingly, the fiscal cliff might be the reason.
As part of the congressional compromise, new legislation makes it easier for investors to convert balances within their savings plan into Roth accounts.
“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,” Patti Balthazor Bjork, director of retirement research at Aon Hewitt, said in a statement.
Immediately following the passage of the American Taxpayer Relief Act of 2012—the so-called fiscal cliff deal—the firm conducted a survey of more than 300 individuals representing large U.S. employers to determine the prevalence of Roth accounts and employers’ likely actions with respect to their plans over the next 12 months.