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Report : Fiduciary Regulatory | December 17, 2025

How America is embracing new saving opportunities in Roth

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Roth 401(k) plans are rapidly becoming essential tools in modern retirement strategies. How America Saves 2025 reports that, at the end of 2024, 86% of Vanguard defined contribution plans offered Roth features, and adoption is expected to increase, driven by new requirements in the SECURE 2.0 Act (SECURE 2.0).*

Adding or expanding Roth options helps employers remain competitive and gives their employees access to tax diversification tools for retirement planning.
Read our research

What’s changing—and why it matters

The Roth landscape is undergoing significant change as new legislation takes effect. The updates go beyond regulatory compliance—they are reshaping the structure of retirement savings plans and offering new ways for participants to maximize their benefits.
Key SECURE 2.0 takeaways:
  • Catch-up contributions for participants whose FICA wages exceeded $150,000 in 2025 and who are otherwise eligible must be made as Roth contributions starting January 1, 2026.
Note: Participants whose FICA wages exceeded $150,000 but whose employers do not offer a Roth 401(k) are not permitted to make catch-up contributions.
  • Super catch-up contributions for ages 60 to 63 may be made as Roth contributions, with limited exceptions (see our research). 
  • Required minimum distributions (RMDs) for Roth 401(k)s are eliminated for participants.

Advantages of Roth 401(k)s

Roth 401(k)s deliver benefits for both participants and employers. Roth 401(k) assets can provide a mix of taxable and tax-free income sources in retirement, enhancing both tax diversification and withdrawal flexibility. Having the ability to manage the taxation of withdrawals from retirement assets offers flexibility in controlling tax brackets, addressing RMDs, reducing taxes on Social Security benefits, and lowering Medicare premiums.

For plan sponsors, offering Roth contributions may help attract and retain top talent as participants recognize and value the flexibility and long-term benefits Roth accounts provide.

What’s next

Vanguard urges plan sponsors to consider taking these actions: 
  • Upgrade your plan design with Roth conversions and after-tax contributions to unlock powerful strategies such as the mega Roth option, an advanced retirement savings strategy described in our research.
  •  Provide effective education on Roth contributions and conversions to help participants understand their options.
  • Bring advice tools into the mix to help participants personalize their Roth approach and stay ahead of legislative changes.

Get the details

For a deeper dive into plan design strategies and actionable recommendations, read our research, Roth Contributions in Retirement Planning, and explore the latest insights in How America Saves 2025.
* Source: How America Saves 2025, Vanguard. 

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Notes

  • All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss.
  • We recommend that you consult a tax or financial advisor about your individual situation.
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