Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • 2014
  • Chapter
  • Discoveries in the Economics of Aging

Who Uses the Roth 401(k), and How Do They Use It?

By: John Beshears, James J. Choi, David Laibson and Brigitte C. Madrian
  • Format:Print
ShareBar

Abstract

Using administrative data from twelve companies that added a Roth 401(k) option between 2006 and 2010, we describe the characteristics of Roth contributions. Approximately one year after the Roth is introduced, 9% of 401(k) participants have positive Roth balances. Roth participation is more than twice as high among 401(k) participants who were hired after the Roth introduction than among 401(k) participants who were hired before the Roth introduction. In essence, once an employee joins a 401(k) she becomes passive/inattentive, thereby reducing the likelihood of reacting to the introduction of a new Roth option. Conditional on contributing to the Roth, 66% of employee contributions go to the Roth, and half of employees contribute to both the Roth and another 401(k) account, consistent with a tax diversification motive. Roth usage is decreasing in age, less likely among women, and only weakly correlated with salary and tenure once we control for other employee characteristics.

Keywords

Retirement; Investment Funds; United States

Citation

Beshears, John, James J. Choi, David Laibson, and Brigitte C. Madrian. "Who Uses the Roth 401(k), and How Do They Use It?" Chap. 12 in Discoveries in the Economics of Aging, edited by David A. Wise. Chicago: University of Chicago Press, 2014.
  • Find it at Harvard
  • Read Now
  • Purchase

About The Author

John Beshears

Negotiation, Organizations & Markets
→More Publications

More from the Authors

    • March 2022
    • Faculty Research

    A Behavioral Science Perspective on Motivation and Incentives

    By: John Beshears and Ashley Whillans
    • February 2022
    • Faculty Research

    Stoy Foods

    By: John Beshears
    • February 2022
    • Faculty Research

    Magrabi: Fulfilling the Vision for the Future

    By: John Beshears
More from the Authors
  • A Behavioral Science Perspective on Motivation and Incentives By: John Beshears and Ashley Whillans
  • Stoy Foods By: John Beshears
  • Magrabi: Fulfilling the Vision for the Future By: John Beshears
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Digital Accessibility
Copyright © President & Fellows of Harvard College