Catch-up contributions allowed. Almost all 401(k) plans (96 percent) allow catch-up contributions for workers age 50 and over. Catch-up contributions let older workers contribute up to $22,000 to a 401(k) account in 2011, compared with the $16,500 younger participants are eligible to deposit in tax-preferred accounts. However, only 13 percent of eligible workers utilized catch-up contributions in 2010.
A Roth option. Some employers allow workers to pre-pay the income tax on their retirement savings using a Roth 401(k) account. "A Roth 401(k) allows you to tax-diversify," says Bernstein. "You don't want to wind up with all of your assets being in a tax-deferred structure." Some 42 percent of plans now offer a Roth 401(k) option, up significantly from 12 percent in 2006. But just 9 percent of employees took advantage of the Roth option when it was offered.
Automation. Almost a quarter of 401(k) plans (24 percent) now automatically enroll employees, more than double the 10 percent of plans that did so in 2006. Three-quarters of plans with automatic enrollment also automatically increase the contribution rate each year. "Companies that really care about helping their participants save for retirement realize they need to get them into the plan and help them save increasing amounts over time," says Itzoe. Automatic enrollment typically applies only to new hires. Employees in plans with automatic enrollment had a participation rate of 82 percent in 2010, compared with 57 percent participation among workers in plans with voluntary enrollment.