From CNBC: 2024-12-26 08:00:18

More employers are adding Roth savings options to 401(k) plans, with 93% of plans offering it in 2023, up from 89% in 2022. Roth accounts tax contributions upfront, while pretax defers taxes until withdrawal. Financial advisors recommend choosing based on current and future tax bracket. Diversifying between Roth and pretax accounts provides tax flexibility in retirement, with Roth withdrawals not counting towards taxable income.

A 2022 retirement law called Secure 2.0 will require high earners to contribute any additional savings over the annual 401(k) limit to Roth accounts, starting in 2026. This will likely lead to more employers offering Roth options. With the mandate for high earners, Roth accounts are becoming a best practice. Businesses can also make employer contributions as Roth savings, further increasing adoption.

Read more: The Roth 401(k) is becoming more common