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Nearly all 401(k) plans now allow for workers to save money in Roth accounts, after legislative changes led adoption to jump significantly in recent years.
A Roth account is funded with after-tax money. Savers pay income tax up front on their 401(k) contributions but don’t pay tax when they withdraw money later, with some exceptions.
Financial planners generally recommend Roth savings for workers who are likely in a lower tax bracket now than when they retire, like young people who are early in their careers. A Roth 401(k) can be particularly beneficial, because it lets workers put aside more per year than a Roth IRA ($24,500 compared with $7,500, respectively, in 2026), and doesn’t have the income restrictions that come with Roth IRA contributions.
Nearly all employers offering a 401(k) plan now allow workers to contribute to Roth 401(k) accounts: About 96% of plans permitted Roth savings in 2024, according to a recent report by the Plan Sponsor Council of America, a trade group representing employers with workplace retirement plans.
That share is up from 93% the prior year. In 2020, 86% of plans offered a Roth option, and in 2015, it was about 60%, according to PSCA data.
About 22% of 401(k) savers made Roth contributions in 2024, up marginally from 21% the prior year, it found.
Secure 2.0’s effect on Roth availability
Workers traditionally save for retirement on a pretax basis, meaning they get a tax break on 401(k) contributions now but pay taxes on their savings and investment earnings later.
In years past, offering more choice to workers was a large motivator for employers to add Roth savings, said Hattie Greenan, the PSCA’s research director.
But legislation known as Secure 2.0 accelerated the trend, she said.
For example, the legislation, which was passed in 2022 during the Biden administration, requires that all “catch-up” contributions from workers age 50 or older who are high earners be made to Roth accounts.
Beginning in 2026, catch-up contributions will generally have to be made as Roth if you earned more than $150,000 from your current employer in 2025.
“This definitely helped increase [Roth availability] into the high 90s,” Greenan said. “We’ve seen an increase north over the last 10 years anyway, but it definitely increased the rate of adoption.”
Additionally, the law gave employers the option to offer 401(k) matches in Roth accounts.
About 19% of 401(k) plans have added or were in the process of adding this option in 2024, and a third of plans are considering it, according to PSCA data.
Why the government likes Roth savings
The government is likely expanding Roth 401(k) access points for workers in order to collect more revenue for federal coffers sooner rather than later, said Philip Chao, a certified financial planner and founder of Experiential Wealth, based in Cabin John, Maryland.
“The government’s motivation is obvious: We want to collect the taxes now, and don’t really want to give everybody a tax break [up front], because we need the money,” Chao said.
In 2025, U.S. debt totaled nearly 100% of gross domestic product, according to the Congressional Budget Office. In other words, U.S. debt is as large as the U.S. economy.
The Tax Policy Center estimates that share will swell to 126% by 2034, exacerbated by the so-called One Big Beautiful Bill, a multitrillion-dollar package of tax and spending cuts Republicans passed in July.
“Roth [availability] is one way — a very small way — to encourage people not to take the tax deduction now,” he said.
Of course, the trade-off is that the government would be forfeiting tax revenue in later years, Chao said.
The decision to save in a Roth account isn’t necessarily a given, Chao said.
For example, lower earners may not have ample additional cash to be able to pay taxes on their 401(k) contributions now, he said. In this case, it might be a better idea to take the tax break up front, and pay the taxes later in retirement, he said.
However, households that can afford it should consider saving at least a portion of their contributions in a Roth 401(k), Chao said.
“Everybody’s situation is a little different,” he said. “I’d say Roth should be a serious contender, if you can afford the taxes.”
