Most defined contribution executives whose plans don't offer Roth options are unlikely to add those features in the next 12 months, according to a survey by Aon Hewitt.
The survey, conducted in January with 304 plan executives, found that 49% of plans don't provide Roth options, Patti Bjork, director of retirement research, said in an interview. Of that group, 71% said they were very unlikely or somewhat unlikely to add the Roth feature in the next 12 months, while 29% said they would likely add the feature.
“The biggest issue (among plans rejecting Roth options) was: Will enough participants use it?” Ms. Bjork said. “They also were concerned about the administrative complexity.”
The lack of sufficient participant interest was cited by 57% of executives who said they were unlikely to add a Roth option, the survey said. Administrative complexity and/or cost was mentioned by 54%.
Aon Hewitt also looked at the 51% of plans that do offer Roth options. Among all plans, 19% offer the opportunity for participants to convert from a traditional pretax contribution to an after-tax Roth option. Most of those plans offering conversion will expand the conversion opportunities outlined in a law signed by President Barack Obama in early January.
Aon Hewitt conducted this Internet-based survey in January, just after Mr. Obama signed the law.
Among the survey respondents, 39% represented plans with more than $1 billion in assets and 21% represented plans with assets between $500 million and $1 billion; the rest represented plans with less than $500 million in assets.
