An employer-sponsored retirement plan may have added a Roth feature within the past year, a change that could have gone largely unnoticed.
Vanguard’s annual How America Saves report tracks saving behavior across more than 1,300 qualified plans and nearly five million participant accounts. The 25th edition, published June 2026, documents a single-year surge that turned an optional feature into a near-universal 401(k) offering.
The feature is the Roth 401(k), which lets your contributions grow and eventually be withdrawn in retirement entirely free of federal income tax.
Yet the workers who stand to benefit most from that expansion are largely ignoring it, and the reasons go beyond simple awareness or education.
Roth 401(k) availability hit 98% of plans, but only 18% of workers opted in
At year-end 2025, 98% of Vanguard employee-sponsored plans offered a Roth feature, up from 86% one year earlier, according to the firm’s How America Saves report. That twelve-point increase is the largest single-year jump in recent years.
Yet adoption barely moved, with only 18% of participants in Roth-eligible plans directing any portion of their contributions to the after-tax option.
Roth usage climbed from 12% in 2019 to 17% in 2023, to 18% in 2025, a slow six-year trajectory that contrasts with the near-total Roth 401(k) availability now in place.
The introduction to a June 16, 2026, Vanguard statement accompanying the report’s release states that decades of data point to plan design, not individual initiative, as the real driver of retirement outcomes.
More than 25 years of data and insights make it clear – strong default contribution options and automatic features have made saving for retirement more accessible and effective for more Americans than ever before.
Younger workers showed more interest, with 20% of participants ages 25 to 34 using the Roth option, compared with 11% of those 65 and older, according to the Vanguard report.
SECURE 2.0 forced plans to add Roth, but it did not force workers to switch
The twelve-point availability surge was not driven by worker demand but by a single provision in the SECURE 2.0 Act signed into law in 2022.
Starting in January 2026, workers age 50 or older who earned more than $150,000 the prior year must direct all catch-up contributions to Roth accounts, the firm’s report stated.
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That mandatory provision pushed nearly all remaining plan sponsors to add a Roth option so that affected employees could continue making catch-up contributions at all.
High-earning workers age 50 or older in plans without a Roth option face a hard deadline heading into 2026, according to Andrew Latham, certified financial planner and content director at SuperMoney.com, GOBankingRates reported.
Those whose employers have not added the feature by 2026 will be unable to make catch-up contributions to their plan at all, Latham told GOBankingRates.
Yet the mandate applies only to high-earning older workers, leaving the broader adoption gap among younger and middle-income participants entirely unaddressed by the law.
Pre-tax defaults and thin awareness keep most 401(k) savers from switching
Most plans default new employees into pre-tax contributions, meaning that choosing Roth requires an active switch that many workers never make. Many participants don’t fully grasp what they’d be switching to.
Certified financial planner Jordan Whitledge, Lead Adviser at Donaldson Capital Management, told CNBC in August 2025 that the tax-free growth benefit is often misunderstood.
Workers may favor the immediate tax break from pre-tax contributions even when long-term tax-free growth could ultimately produce a larger after-tax retirement balance.
The power of defaults in 401(k) design is well-documented. Vanguard’s report shows auto-enrolled workers participate at a 94% rate versus 64% in voluntary plans, a gap that illustrates how much of retirement saving behavior is set by the plan, not the participant.
The same design principle has not yet been applied to the Roth vs. pre-tax choice at most sponsors.
Why plan sponsors, not workers, hold the key to closing the Roth gap
Vanguard’s findings point to specific levers plan sponsors have not yet pulled at scale. Sponsors can change the default contribution type for new hires or run one-time re-enrollment campaigns that give existing participants a fresh Roth-vs.-pre-tax election.
They can also enable Roth in-plan conversions, a feature offered by 36% of plans in 2025 but used by just 4% of eligible participants, mostly higher-income workers with larger balances.
The SECURE 2.0 mandate has already forced sponsors to build the Roth infrastructure.
Whether sponsors leave the after-tax option behind, an option most workers will never navigate, or surface it the way auto-enrollment surfaced participation two decades ago, is a design decision still to be made.
Where the Roth gap shows up in your own 401(k)
The Roth 401(k) may have appeared quietly in your plan this past year. Two things determine whether you’re using it: if your plan offers it, and what your default contribution type is set to. Most plans still default to pre-tax, so no action means no Roth.
Workers aged 50 or older earning above $150,000 in 2025 face different rules for catch-up contributions beginning in January 2026.
Those contributions must go into Roth accounts, making the feature essential for eligible participants who want to continue contributing.
The pre-tax vs. Roth choice ultimately turns on where a worker’s tax rate lands in retirement, a calculation that varies by career stage and income trajectory.
