"The Roth 401(k) offers meaningful benefits to a wide range of participants, not just the highly paid," said Steve Utkus, author of a Vanguard Center for Retirement Research report on Roth 401(k)s published this week.

        Unfortunately, few firms plan to offer their employees on Day 1 a chance to sock away money in these accounts that are part Roth IRA and part 401(k). Just 15% of firms say they will add a Roth 401(k) option in 2006, according to a Vanguard study of its plan sponsors.

        What's worse, assuming they even get the choice experts fear that many employees may be paralyzed into inaction when trying to figure out which retirement-savings plan to use -- the Roth 401(k) or the traditional 401(k).

        "It's not as simple any more," said Rande Spiegelman, vice president of financial planning for the Schwab Center for Investment Research.. "And more choice is not a good thing if it leads to paralysis."

        Consider the advice of Spiegelman. He says the decision to save in a Roth 401(k) or not rests largely a person's tax bracket -- and a little guesswork. In essence, he says you have to guess whether your tax bracket will be higher or lower at retirement than it is today. If it's lower now than it will be at retirement, then a Roth makes sense, he says.

        Another major factor to consider is how much one can sock away in a Roth 401(k). If a person can save the same dollar amount in a Roth 401(k) as they could in their traditional 401(k), then the Roth 401(k) makes sense as well. The reason? It means you can give up a tax break today for a tax break in retirement. (Because a traditional 401(k) contribution is deducted from your paycheck pretax, you can save $100 while only lowering your net income $72, assuming you are in a 28% tax bracket. Using after-tax dollars would require you to deduct the full $100 from your net.)

        For those unsure about whether they will be in a higher or lower tax bracket in retirement (or at the time of distribution) or unsure about whether they can afford to set aside as much after-tax money in a Roth 401(k) as pretax money in a traditional 401(k), Spiegelman suggests splitting contributions between a regular 401(k) and a Roth 401(k) to hedge against unknown tax changes.

        Utkus, author of the just published "Tax Diversification and the Roth 401(k)," likewise recommends that employees save money in a Roth 401(k) as a way to diversify what he calls tax risk and potentially enhance after-tax savings in retirement.

        "Just as they hold fixed-income assets to diversify the risks of stocks, so participants should hold Roth savings to diversify the risks associated with pretax savings," says Utkus. See this Vanguard Web site for the full report.

        That's not to say that everyone should diversify tax risk. In fact, Utkus' number crunching suggests that some groups should adopt the Roth 401(K) and some should not.

        Those who should include employees who are better prepared for retirement, employees who are saving the maximum possible and those who are in a low marginal tax bracket (10% or 15%). And those who shouldn't include employees who are unprepared for retirement, employees such as sales agents with high temporary incomes and employees with children and family income generally from $20,000 to $50,000 who receive the earned income credit or additional tax credits.

        To be sure, knowing whether you are prepared for retirement is not the easiest question to answer, especially in a world where just one in four Americans are extremely confident about their retirement security.

        But Utkus has some rules of thumb. Generally, if you have a large nest egg, sock away more than 6% per year or the maximum possible ($15,000 or $20,000 including the catch-up), and expect to generate a high level of replacement income in retirement from pensions (a traditional defined benefit plan) and retirement accounts (such as 401(k) or IRA), then use the Roth 401(k).

        In fact, he says those folks might consider saving the lion's share of their money earmarked for retirement in the Roth 401(k) rather than splitting their money equally between the two types of 401(k)s. His reasoning? Utkus says the well-prepared are likely to be in the same tax bracket in retirement. Plus, they may be exposed to the risk of higher tax rates in retirement -- either because of current rules on Social Security taxes or by future tax increases.

    Meanwhile, if you have a small nest egg, save less than 6% per year in a retirement account and will likely rely mostly on Social Security benefits you should continue investing in a traditional 401(k).

        April Caudill, managing editor of Tax Facts and author of a recent Journal of Financial Service Professionals report, agrees with Utkus and Spiegelman that employees who may be in the same or higher tax bracket at the time of distribution should use a Roth 401(k). And she agrees that employees who can defer as much on an after tax basis in a Roth 401(k) as they would have deferred pretax in a traditional 401(k) should use a Roth 401(k).

        But she also says employees who want to avoid lifetime minimum distribution requirements should consider the Roth 401(k). Participants in a traditional 401(k) or traditional IRA must begin taking minimum distributions after turning age 701/2. But by saving money in a Roth 401(k) and then rolling the funds into a Roth IRA, a plan participant can avoid required minimum distributions. In other words, no need to withdraw the money and no need to pay taxes.

        And that's a tax break well worth the wait and easily understood.