Many workers may have gained a powerful new retirement-saving option without realizing it. The feature is called the Roth 401(k), a contribution type that lets workers pay income taxes now so that retirement withdrawals are federal-tax-free.
The option has been around for two decades, but it remained largely overlooked in workplace retirement plans until a federal law pushed more employers to offer it.
Yet access alone does not guarantee that workers will use the option, potentially leaving millions of older, higher-earning workers with less money in retirement.
Roth 401(k) availability surged to 98%, while worker adoption stalled at 18%
At year-end 2025, 98% of Vanguard plans offered a Roth contribution feature, up sharply from just 86% one year earlier. The firm’s How America Saves report documented that 12-point jump as the largest single-year increase in recent years.
Yet only 18% of participants who had access to a Roth 401(k) directed any contributions to the after-tax option, Vanguard found. Adoption has inched from 12% in 2019 to its current level, a pace that contrasts sharply with near-total plan availability.
Among workers earning $150,000 or more, the adoption rate is only modestly better at 21% when their plan offers the feature. That figure has a new weight because those same earners now face a federal mandate that ties their catch-up contributions directly to Roth.
Lauren Valente, Managing Director of Vanguard Workplace Solutions, noted in the report’s press release that plan defaults have driven the broadest gains in retirement saving.
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
Roth contributions, however, have not been folded into that default-driven architecture in the way pre-tax deferrals have over the past two decades.
SECURE 2.0’s Roth catch-up mandate forces a paycheck-level change for high earners
The rush to add Roth features was driven by a single provision of the SECURE 2.0 Act.
Under the law, workers age 50 or older whose 2025 Federal Insurance Contributions Act (FICA) wages exceeded $150,000 must make all catch-up contributions as Roth, CAPTRUST noted in its SECURE 2.0 Roth catch-up guidance.
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Final Internal Revenue Service (IRS) regulations arrived in September 2025, with the confirmed $150,000 wage threshold published that November, leaving employers a compressed compliance window.
Employers that fail to add a Roth feature cannot accept catch-up contributions from affected high earners, according to CAPTRUST.
For 2026, the standard catch-up limit for workers age 50 and older is $8,000, layered on top of the $24,500 elective deferral ceiling.
Workers ages 60 to 63 can contribute up to $11,250 through a separate super catch-up under SECURE 2.0, which 91% of Vanguard plans have adopted, according to Vanguard’s How America Saves.
But if any of the three provisions is missing from a given plan, the $8,000 catch-up, or $11,250 for workers 60 to 63, may not process at all until the plan is amended.
Catch-up contributions are well used among the income group this mandate targets, with 52% of Vanguard participants earning above $150,000 making catch-up contributions in 2025, Vanguard stated.
The Roth designation lands in the same paycheck as the deferral, and so does the tax bill.
A worker in the 24% federal tax bracket would owe roughly $1,920 in additional federal tax on the standard catch-up. The super catch-up would raise that amount to about $2,700, before accounting for any state income taxes.
SECURE 2.0’s Roth catch-up mandate shifts retirement contributions and taxes directly into the paychecks of high-earning older workers.nortonrsx / Getty Images
In-plan Roth conversions offer a second lever that few participants are pulling
Beyond the catch-up mandate, the Vanguard report spotlights another underused tool for building tax-free retirement income in an employer plan.
In 2025, Roth in-plan conversions were offered by 36% of plans, allowing workers to move existing pre-tax balances into a Roth subaccount.
Only 4% of eligible participants converted any portion of their balance, while a separate automatic conversion feature drew slightly more engagement.
Automatic Roth in-plan conversions were available in 10% of plans, with 8% of active participants in those plans using the feature, Vanguard reported.
Workers who did convert tended to be higher-income, mid-career savers with large balances, a profile that overlaps with catch-up-eligible earners.
Among those earning more than $250,000, 14% converted assets through in-plan conversions, and 26% used the automatic conversions when available, according to How America Saves 2026.
What the Roth 401(k) gap means for high earners in 2026
For workers age 50 or older with 2025 FICA wages above $150,000, three items determine whether the catch-up will be processed correctly in January 2026.
First, the Summary Plan Description should identify the Roth contribution feature.
Second, HR or the plan’s benefits team should confirm that the catch-up election is coded as Roth rather than pre-tax.
Lastly, the first pay stub of the year should show a separate Roth line for the catch-up contribution, as CAPTRUST confirmed.
The conversion decision for this group ultimately comes down to their current marginal tax rate. Converting now means paying taxes at today’s rates in exchange for tax-free growth and withdrawals later. But a lower-income year, a gap before retirement, or changes to future tax rates could make waiting more advantageous.
Related: Vanguard data reveals a troubling Roth gap in your 401(k)