Who Uses the Roth 401(k), and How Do They Use It?

John Beshears, James Choi, David Laibson and Brigitte Madrian

No 19193, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Using administrative data from twelve companies that added a Roth 401(k) option between 2006 and 2010, we describe the characteristics of Roth contributions. Approximately one year after the Roth is introduced, 9% of 401(k) participants have positive Roth balances. Roth participation is more than twice as high among 401(k) participants who were hired after the Roth introduction than among 401(k) participants who were hired before the Roth introduction. In essence, once an employee joins a 401(k) she becomes passive/inattentive, thereby reducing the likelihood of reacting to the introduction of a new Roth option. Conditional on contributing to the Roth, 66% of employee contributions go to the Roth, and half of employees contribute to both the Roth and another 401(k) account, consistent with a tax diversification motive. Roth usage is decreasing in age, less likely among women, and only weakly correlated with salary and tenure once we control for other employee characteristics.

JEL-codes: D14 D91 H31 (search for similar items in EconPapers)
Date: 2013-07
Note: AG PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published as Who Uses the Roth 401(k), and How Do They Use It? , John Beshears, James J. Choi, David Laibson, Brigitte C. Madrian. in Discoveries in the Economics of Aging , Wise. 2014

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Chapter: Who Uses the Roth 401(k), and How Do They Use It? (2014)
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