The Roth 401(k) is particularly popular among professional service firms, including medical practices, law firms, and consulting agencies, according to an analysis by Merrill Lynch. The company saw a 21% increase in plans adopting a Roth 401(k) feature in the first quarter of 2008, and 25% of those plans were sponsored by professional service firms.
Merrill Lynch said more than 13,000 participants (6% of those eligible plans offering the option) are contributing to a Roth 401(k) account, which was up 37% in the first quarter of 2008. The company’s total assets in Roth 401(k) accounts are $70 million, with $28 million contributed in the first three months of this year.
Almost 20% of plans with the Roth 401(k) option have participation rates of 10% or more, and 10% of the plans have participation rates of 20% or more, the company said.