Employers continue to add Roth 401(k) plans to their package of retirement savings options, but employee participation remains low.

First authorized under a 2001 law, which took effect five years later, Roth 401(k) plans differ from the far better known and much more popular traditional 401(k) plans in one key way: In a traditional 401(k) plan, employees make pretax contributions to their accounts through salary reduction.

That reduces employees' taxable income for the year in which the contributions are made. However, the contributions and any investment income earned on those contributions are taxed when funds are withdrawn, typically when an employee retires. The amount of the taxes paid will depend on the amount of the distribution, the tax bracket the employee is in and the tax rates in effect at the time the distribution is taken.

By contrast, employee contributions to Roth 401(k) plans are made with after-tax dollars. However, if certain conditions are met, employees can withdraw — tax-free — the contributions made to the plan and any earned investment income.

Such tax treatment would be especially beneficial to lower-income employees if they are in much higher income-tax brackets when they retire, compared with when they are making plan contributions.

Looking to diversify the tax treatment of their employees' retirement plan savings, the percentage of employers offering Roth 401(k) plans has soared in recent years. A little more than 50% of employers now offer Roth 401(k) plans, up from just 11% in 2007, according to periodic surveys by benefits consultant Aon Hewitt in Lincolnshire, Ill.

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“There has been steady adoption of the plans,” said Gerry Mullane, a principal with The Vanguard Group in Malvern, Pa., a mutual fund company and retirement plan administrator.

On the other hand, employee participation in Roth 401(k) plans is very low, especially when compared with the percentage of employees who contribute to traditional 401(k) plans.

For example, more than half of employers with Roth 401(k) plans reported that less than 5% of employees contributed to the plans, while about 30% said between 5% and 10% made Roth 401(k) plan contributions, according to a 2102 Towers Watson & Co. survey.

By contrast, employee participation rates in 401(k) plans are much higher, often in the 60% to 70% range, according to various benefits consultant surveys.

Still, some employers report above-average employee contribution rates to Roth 401(k) plans. For example, at Vanguard, which has offered a Roth 401(k) plan since 2006, about 26% of employees make contributions to the plan.

“We run several webinars each year and have built a quick questionnaire to help crew members (employees) decide whether or not Roth may be appropriate for them,” a Vanguard spokeswoman said.

Experts say there are a variety of reasons why relatively few employees contribute to Roth 401(k) plans.

One reason may be distrust of government, said Jack Abraham, a principal with PricewaterhouseCoopers L.L.P. in Chicago.

“Some people just don't trust that government will stick to its promise” and fear that that one day lawmakers will change the rules so that perhaps Roth 401(k) plan distributions over a certain amount will be taxable, Mr. Abraham said.

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Such suspicions, experts say, are fueled by federal policymakers themselves. For example, earlier this year, the Obama administration proposed barring employees from earning additional retirement plan benefits once the value of accrued benefits hit a cap of a little more than $3 million.

Such proposals stoke fears among employees that the federal government won't stick to its promise that Roth contributions will remain tax-free, Mr. Abraham said.

Others say the key to boost employee participation in Roth 401(k) plans is to better communicate the value of tax diversification.

Since it is impossible for employees to predict with precision how tax rates will change in the future, as well as what tax bracket they will be in, a balanced approach from a tax planning perspective would be to divide their contributions between Roth 401(k) and traditional 401(k) plans, experts say.

“For most people diversification would be beneficial,'' said Kevin O'Fee, a vice president with Fidelity Investments in Boston, another mutual fund company and retirement plan administrator.

“That message has not been drilled down,” said Marina Edwards, a senior Towers Watson retirement consultant in Chicago.

“So much effort has been made in the last 20 years to instill in employees the advantages of pretax contributions. Now, it's time to instill the importance of tax diversification and the how there can be better financial outcomes” with such an approach, Ms. Edwards said.