How Roth 401(k) Options Are Transforming Workplace Retirement Plans
For years, most employer-sponsored retirement plans focused almost entirely on pre-tax saving. Employees contributed, reduced their taxable income, and deferred taxes until retirement. That traditional structure still works well for many people, but today’s workforce is asking for more flexibility, more control, and more intentional tax planning. That’s where Roth 401(k) options have become a game-changer. In fact, with the expanded Roth features under SECURE 2.0—especially Roth employer contributions—Roth strategies are quickly becoming one of the most important components of a modern retirement plan.
Roth 401(k) contributions flip the traditional tax model on its head. Instead of saving pre-tax dollars and paying taxes later, employees contribute after-tax dollars now and enjoy tax-free withdrawals in retirement. This approach is particularly powerful for younger employees who are early in their careers and likely in lower tax brackets. Paying taxes today while allowing decades of growth to compound tax-free can dramatically improve long-term outcomes. For many mid-career employees, Roth also offers a form of tax diversification that shields them from future tax-rate uncertainty—an increasingly relevant concern in today’s fiscal environment.
What many employers don’t realize is how much Roth options influence participation and engagement. Employees want flexibility, and offering both traditional and Roth contributions allows them to tailor their savings strategy to their personal financial situation. Some may choose Roth for long-term tax-free growth; others may choose pre-tax to maximize take-home pay. Many blend the two. The point is choice—and choice creates ownership. When employees feel they have control over how their retirement dollars are taxed and invested, they connect more deeply with the benefit itself.
SECURE 2.0 expanded this flexibility further by allowing Roth employer contributions, something that was not previously permitted. This change opens the door to powerful new plan designs. Employers can now choose to make their match or nonelective contributions on a Roth basis, giving employees even more tax planning opportunities. For workers who prefer Roth treatment, this feature helps align their entire savings strategy with their long-term goals. And because employer Roth contributions still count toward annual limits, employees who use this feature can accelerate the growth of their tax-free retirement bucket.
Another overlooked benefit of Roth features is their simplicity during retirement. Roth accounts are not subject to required minimum distributions (RMDs) in the same way pre-tax accounts are. That means retirees have more control over when and how they draw from their savings, which makes Roth strategies appealing for estate planning, late-career tax planning, and long-term financial independence. For employees nearing retirement, the ability to shift or diversify contributions between pre-tax and Roth is a valuable planning tool—and one that can significantly reduce tax burdens over time.
From the employer’s perspective, offering Roth options strengthens the retirement plan without adding administrative complexity. Modern systems allow employees to split contributions easily, track taxes in real time, and adjust strategy through user-friendly interfaces. When combined with payroll integration, Roth contributions flow just as seamlessly as pre-tax dollars. In a Pooled Employer Plan structure, the administrative and compliance oversight is even more streamlined, as the Pooled Plan Provider takes responsibility for documentation, reporting, and ensuring Roth features are properly implemented.
At Apex Wealth Path, we encourage employers to embrace a forward-looking approach to plan design. Roth features don’t just make the plan more attractive—they make it more effective. By offering both pre-tax and Roth options, including Roth employer contributions, employers give their workforce powerful tools to optimize their long-term financial strategy. We help employees understand the difference, model the impact, and make informed choices that strengthen their financial futures.
A modern 401(k) isn’t just about saving—it’s about creating flexibility, tax efficiency, and long-term opportunity. Roth options deliver exactly that. And for many employees, they can be the difference between a good retirement plan and a great one.
Stephen Bellosi, AIF®, AWMA®
Managing Partner, Apex Consulting