As Roth 401(k) plans continue to spread, young workers increasingly are voting to go Roth. In the first quarter of 2013, 10% of all participants in Wells Fargo-administered defined contribution plans contributed to a Roth 401(k), when available, up from 8.9% a year earlier. Leading the way were employees under age 30: 16.9% chose the Roth route, a jump from 15.2% participation in last years first quarter. (Only 4% of participants in their 60s chose the Roth version this year.)
The continued upswing of Roth usage is driven by younger investors, Laurie Nordquist, director of Wells Fargo Retirement, said in a statement. This suggests that they are aware that their tax rates will likely go up as they age. Therefore it is a good strategy to opt for the lower tax bracket now, versus waiting to be taxed at their unknown rates in their 60s.
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