New Roth 401(k) Struggles for Acceptance

I wrote some time ago that the Roth 401k seems to be a dud so far because companies are taking a wait-and-see approach to it. However, for some, the Roth 401k is a great retirement investment.

Yet, it continues to have problems. This piece from the Seattle Times notes that the new Roth 401(k) is struggling for acceptance. Their key thoughts:

The Roth 401(k) is a new tax-savvy retirement plan being virtually ignored by employers these days.

Like any benefit, employers don't have to provide the Roth 401(k). Only about 18 percent of U.S. companies surveyed said they would offer it when it became legal Jan. 1, according to the Chicago-based Profit Sharing and 401(k) Council of America, an employers' group.

"I see this as a great opportunity for my clients," said financial planner Michael Dubis of Touchstone Financial in Madison, Wis. "But employers see this as another expense, not a benefit."

Yikes! This could be the death of the Roth 401k. If companies really see it as an expense rather than a benefit, it's in deep trouble. That's too bad, because as the article goes on to say, it can be a great deal for some retirees:

Since every non-Roth retirement program taxes you at the full rate when you pull out money, the Roth can boost retirement income by more than 35 percent relative to other programs if you are in the top tax bracket.

I think that it's still way too early and the jury's out. We won't know how well the Roth 401k is (or isn't) accepted for a couple years at least.