Vanguard's 2026 Savings Report Finds Record Balances, Unused Roth Room

Vanguard published its 25th annual How America Saves report on June 16, 2026, drawing on record-keeping data from nearly five million participants in more than 1,300 workplace retirement plans. The headline findings are strong: record plan participation, a record average savings rate and account balances up sharply in 2025. But a closer look at the same data shows that many of the tools built specifically for high earners, from after-tax 401(k) contributions to in-plan Roth conversions, remain largely unused even where employers offer them.

What changed

Vanguard reported that the average deferral rate reached 12.1% of pay in 2025, an all-time high, and that 45% of participants raised their savings rate during the year. Account balances rose 13% year over year, helped by both contributions and market performance. Plan design has also shifted: nearly two-thirds of plans now default new hires into savings rates of 4% or higher, and roughly a third default at 6% or higher, both records. Employer matching contributions averaged a record 4.7% of pay, and about 69% of participants now hold a professionally managed allocation such as a target-date fund, according to Vanguard's report.

Who is affected

The gains are broad, but they are not even. CNBC's review of the data found the average 401(k) balance among men was $194,597 in 2025, about 33% higher than the $146,476 average among women, even though women defer a higher share of pay than men in every income band Vanguard tracked. Vanguard attributed most of the gap to differences in pay rather than savings behavior: among participants earning $30,000 to $149,999, balances by gender were within about 10% of each other.

For high earners specifically, the report points to a narrower gap in access than in use. Only 36% of plans in Vanguard's data offer in-plan Roth conversions, the feature that lets a worker move after-tax 401(k) money into a Roth account, and just a tenth of those plans convert the money automatically, according to reporting on the Vanguard data. Where the feature is available, usage is low: about 4% of participants with access use it, rising to roughly 14% among savers earning $250,000 or more, and to about 26% when the plan converts automatically rather than requiring an election.

The after-tax math

The strategy in question, often called the mega-backdoor Roth, exploits the gap between the regular 401(k) deferral limit and the much higher overall cap on contributions to a single plan. For 2026 that overall cap, set under Section 415(c) of the tax code, is $72,000, while the regular elective-deferral limit is $24,500.

Example, with round numbers: a 45-year-old earning $250,000 defers the maximum $24,500 and receives a $7,500 employer match. That leaves $40,000 of room under the $72,000 total cap. If the plan allows voluntary after-tax contributions and in-plan Roth conversions, the saver could direct that $40,000 as after-tax money and convert it to Roth, on top of the regular deferral, materially larger than the $24,500 most workers are limited to. Without both plan features, that room is simply unavailable, regardless of the saver's income or intent.

Moves to discuss with your advisor

• Whether the employer's plan document permits voluntary after-tax contributions above the $24,500 deferral limit, and whether it offers in-plan Roth conversions, ideally automatic ones.
• How much of the $72,000 total cap is already used by the employee deferral and any employer contribution, which determines how much after-tax room is left.
• For employees 50 and older whose prior-year wages exceeded $150,000, that catch-up contributions must go into a Roth account starting in 2026, per Vanguard's guidance, adding to current taxable income rather than deferring it.
• Whether a target-date fund or other default allocation remains appropriate once after-tax contributions are added, since the after-tax sleeve may need separate investment direction.

What to watch

Plan sponsors control whether the mega-backdoor Roth is available at all, and Vanguard's data suggests most mid-size and smaller employers have not added the feature. Households who want the option may need to raise it with their employer's benefits or HR team rather than assume it exists, and workers changing jobs may want to check a new employer's plan document for after-tax and in-plan conversion features before assuming past strategies still apply.

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