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Q: As a result of a recent educational campaign, we’ve seen an increase in employee usage of our Roth account option ─ especially among our younger workers. Can you provide any recent industry trends or data regarding Roth account uptake among this cohort?
A: According to Fidelity data shared in a recent PLANADVISER article, 21.4% of Gen Z participants now contribute to a Roth 401(k), up from approximately 12% five years ago. Principal Financial Group shared that overall Roth participation rose to 16% over the past year with Gen X (13.9%) and Millennials (15.5%) leading the way. It’s good that you are educating employees on the potential benefit of using a Roth account option. According to the article, despite Roth’s growing popularity, most workers still save through traditional pretax 401(k) contributions.
Q: Our plan committee, working closely with our plan advisor, is considering adding retirement income products to our employee offering starting next year. Are you aware of any current industry resources for us to learn about the products, features and benefits currently available?
A: Earlier this year, the Institutional Retirement Income Council and the Society of Professional Asset Managers and Recordkeepers announced the launch of the Defined Contribution Retirement Income Solutions Framework, a document intended to help plan sponsors, advisers, consultants and fiduciaries compare retirement income products. The resource offers standardized, side-by-side profiles of the products and covers the main categories of retirement income products currently available to defined contribution plan sponsors (such as deferred income annuities and qualifying longevity annuity contracts).
Q: What are the latest industry trends related to automatic enrollment default contribution rates? We currently have it set at 4% but are contemplating increasing it.
A: According to Vanguard’s “How America Saves 2026,” 62% of plans chose a default of 4% or higher in the 2025 plan year, up from 27% of plans in 2005. If you are contemplating increasing your rate, Vanguard reports that 31% of plans chose a default of 6% or more in the 2025 plan year — an increase of more than 50% since 2016. You may also be interested to know that 40% of plans with automatic enrollment and automatic annual increases capped the annual increases at 10%. In addition, one in three plans implemented caps between 11% and 15%, whereas 5% had no cap. The survey recommends that plan sponsors set the cap at a level in which participants are saving 15% or more, including employer contributions.
Informational Sources: PLANADVISER: “Why Does Gen Z Like Roth Plans?” (June 30, 2026); PLANSPONSOR: “IRIC, SPARK Launch Evaluation Framework for DC Retirement Income Solutions” (April 22, 2026); Vanguard: “How America Saves 2026 (25th Edition)” (June 2026).
Kmotion, Inc., 12336 SE Scherrer Street, Happy Valley, OR 97086; 877-306-5055; www.kmotion.com
©2026 Kmotion, Inc. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this publication are for general information only and are not intended to provide tax or legal advice or recommendations for any particular situation or type of retirement plan. Nothing in this publication should be construed as legal or tax guidance, nor as the sole authority on any regulation, law, or ruling as it applies to a specific plan or situation. Plan sponsors should always consult the plan’s legal counsel or tax advisor for advice regarding plan-specific issues.
This material is intended to provide general financial education and is not written or intended as tax or legal advice and may not be relied upon for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel.