Getting Started with Betterment for Business

This guide is intended for participants in Betterment for Business 401(k) plans. Your use of this website is governed by our Terms & Conditions. The information in this guide is provided by Betterment LLC, an SEC registered investment advisor.

Welcome to your Betterment 401(k) plan! Betterment for Business is a revolutionary 401(k) solution that is low cost, easy to use, and includes personalized, automated investment advice for all participants. We are using best in class technology to help you make smarter decisions and better prepare for retirement.

This guide walks you through the basic steps to set up your account and contains various resources to help you better understand your plan so that you can get the most out of your 401(k). You can also see how to make adjustments to your 401(k) to ensure that it aligns with your personal long-term savings and retirement goals.

 

 

Part 1: What is Betterment for Business?

Betterment for Business offers best-in-class technology to help you prepare for retirement through Betterment LLC, a registered investment advisor. Our portfolio is maximally diversified, and comprised of low-cost, liquid, index-tracking exchange-traded funds, or ETFs. We use tax-efficient algorithms and automate optimal behavior to maximize your ability to grow your money.

You can learn more about the investment choices and portfolio here.

Part 2: Account Setup

Once you receive a welcome email from Betterment for Business, you’ll answer a couple quick questions to finish your account setup. In addition to basic personal information, you will notice some questions related to your financial background. This information is important so that we can offer personalized, automated savings and retirement advice that is relevant based on a more holistic financial picture.

After you finish answering the questions, review the Plan Agreement, and get started managing your 401(k)!

If you are an existing Betterment customer, you will receive an email to the email address associated with your personal account, prompting you to complete your 401(k) account setup, which you’ll access from your existing Betterment dashboard.

You will be able to manage your 401(k) in the same place that you manage your other Betterment accounts.

Part 3: Types of Plans Offered

Betterment offers both Traditional and Roth 401(k) accounts. Traditional 401(k)s are most commonly offered, but your company may give you the option to set up both types of accounts. The main difference between the two is in when your 401(k) contributions are taxed.

Traditional 401(k)
Your Traditional 401(k) contributions are pre-tax. Because the contribution is deducted from your taxable income, your contribution might lower your income taxes for the year. Upon withdrawal, your contributions and earnings will be taxed. Some individuals choose this option if they foresee being in a lower tax bracket upon retirement.

Roth 401(k)
Roth 401(k) contributions are not pre-tax and therefore do not reduce your taxes in the year that the contribution is made. Upon withdrawal, your contributions and earnings are tax exempt.

Traditional and Roth are treated as independent goals in your Betterment dashboard. The process to access, manage and make adjustments to both types of accounts is the same, but make sure that you make all relevant changes for each account separately. Learn more about the difference here.

Part 4: Managing Your 401(k)

Changing your Deferral Amount

Once you’ve set up your account, you can specify the amount of your paycheck you’d like to contribute to your 401(k) each pay period. If your plan has autoenrollment, your account is set up with a default contribution amount as well as an age appropriate default portfolio. Please note that you will need to establish your deferral election for your Traditional and Roth accounts separately if your plan offers both types.

In your Betterment dashboard, click on the “% Deferral Per Pay Period” link. You will then see a new screen that shows your current deferral. Here, you can specify a $ amount or % deferral amount per pay period.

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Adjusting Your Asset Allocation

Once you’re logged into your Betterment 401(k), you can make adjustments to the asset allocations for both your Traditional 401(k) and your Roth 401(k). Your asset allocation for each is indicated by the dial on the right side of the screen. Click on the button to the right of your 401(k) plan and select the option to “Change Allocation” from the dropdown menu.

You will see a new screen that shows your current allocation. Your current allocation and risk level are selected based on your Social Security retirement age.  To change your allocation, simply click on the “Adjust your target allocation” button.  You can also drag the “Allocation” slider at the top left corner to your desired position. Click “Set” in the top right once you’re done.

If you also have a Roth account you’ll need to change the asset allocation for that Goal separately.

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You can also click “See current holdings” to view your personal portfolio and your allocation to each ETF within both asset classes. You will see an option to “Adjust target allocation” from your current holdings.

Part 5: Set Up a Personal Betterment Account

When you’re logged into your Betterment 401(k) account, click on the “Add Goal” button located in the upper right corner. You’ll be able to add a taxable individual, IRA, joint or trust account. Betterment makes it easy to manage all of your assets holistically, and we provide advice accordingly.

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Part 6: Participant Advice and RetireGuide

Using Betterment’s RetireGuide, we’ll estimate how much you need to save for retirement and how you should allocate your money across stocks and bonds, taking into account all of your investments, even those outside of your 401(k).

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Once you’re in your RetireGuide page, click on the “Edit Assumptions” button in the top right corner of the screen. Here you will be able to enter and modify your assumptions about your future, the economy, your income and taxes. At the top of the screen, you will see a summary of your goals, and how we think you can reach them.

At the bottom of the screen, you will see suggested annual spending based on your current savings and RetireGuide’s recommended savings for you. Click on “Continue to How to Save” for a list of recommendations on how you can reach your retirement goals.

Part 7: Sync External Accounts

Syncing external accounts to your Betterment 401(k) allows us to provide you with retirement planning and saving advice that is based on a more holistic financial picture. When you’re logged into your Betterment account, click on the “Sync External Account” link in the bottom right corner. Select a firm to sync, and provide your login credentials for that account.

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Part 8: Company Contribution

Great news!  Many companies elect to provide an employer match or profit-sharing component to their 401(k) plan.

If your company provides a match, your employer will give you a certain amount for each dollar you contribute, up until a specified percentage of your annual salary. Each company uses its own formula, but employer matches are typically either $0.5 or $1 match per dollar you contribute, up to 6% of your salary. Only those participants who make deferral contributions will be eligible to receive the employer match.

Profit sharing works a little differently, and contributions go to all eligible employees, not just those contributing 401(k) deferrals. A common practice with profit sharing contributions is to link the amount of the contribution to the employee’s compensation (i.e. 10% of salary). Profit sharing is generally calculated and funded once a year.

Check with your benefits administrator to see if your plan includes an employer match contribution or has profit sharing.

Part 9: Participant Disclosures

Over the life of your plan, you will receive various documents that provide background information about your plan as well as inform you of any changes or updates to the plan. Your employer is legally required to distribute them to you. Contact your benefits administrator if you have any questions about the contents of these documents:

  • Summary Plan Description (SPD): This is the primary document that communicates the nature of your plan, how it operates, and its rights and obligations to you, the participant, and your beneficiaries. This basic document provides information on eligibility, automatic enrollment, employee and employer contributions, and the vesting schedule, if applicable. Any fees and expenses to the participants that are associated with the plan will also be outlined here.
  • Summary of Material Modifications (SMM): Anytime changes are made to the plan that are related to the information in the SPD, you will be notified of the change through either an SMM or updated version of the SPD.
  • Fee Disclosures: Fees and expenses related to the plan and investments will be reported to you on an annual basis.  On a quarterly basis, you will receive a notice that outlines any plan-related administrative fees or expenses that were deducted from your account. These will be described at a higher level when you initially become eligible to join the plan and on an annual basis. You will also receive an initial and annual disclosure of investment-related fees as well as the operating expenses of your investments.
  • Qualified Default Investment Alternative (QDIA) Notice: All Betterment for Business 401(k) plans have a QDIA, or a portfolio that a participant is automatically defaulted to in the event that they do not make any investment elections. You will receive a notice that explains the default investment itself, the choices you have, circumstances under which you will be defaulted into the QDIA, and your right to direct your assets to other investments. QDIAs are offered under a variety of circumstances including if the plan has automatic enrollment or immediate eligibility. All participants will receive this document 30 days before becoming eligible to join the plan and again 30 days before the start of each subsequent plan year.
  • Automatic Enrollment Notice: If your plan has an automatic enrollment feature, this notice explains the plan’s automatic enrollment process, default deferral percentage, and your rights as a participant such as changing your deferral percentage or opting out of making automatic contributions. This notice will also specify the QDIA, as well as explain your right to make adjustments to your investment allocations. All participants should receive this document 30-90 days before becoming eligible to join the plan, and in advance of the first paycheck that will have funds withheld.
  • Safe Harbor Notice: If your employer has a Safe Harbor plan in place, they are required to notify you of your rights, obligations and benefits related to the plan. This notice describes the employer contribution that will be provided to participants for the plan year, outlines important plan features and defines what compensation is eligible for the Safe Harbor match.  All participants should receive this document 30-90 days before becoming eligible to join the plan, and again within 30 – 90 days before the start of each subsequent plan year.
  • Blackout Notice: Blackouts typically occur when an employer changes to a new 401(k) provider, or if the plan sponsor is making significant changes to the plan.  If your plan is going to endure a blackout period that lasts longer than three days, your plan sponsor is required to provide you with a written notice at least 30 days before the blackout period begins. During the temporary blackout period, you will still be able to make deferral contributions, but you won’t be able to access the funds in your account or make changes to your asset allocation or deferral elections.

Part 10: Contact Our Support Team

Betterment offers a dedicated Customer Success team which can be reached at:
support@betterment.com or call +1 855-906-5281. Live chat is also available here.

Customer Success hours are:
Monday – Friday: 9:00 AM – 8:00 PM ET
Saturday – Sunday: 11:00 AM – 6:00 PM ET

Part 11: Roll over Your Previous 401(k)

Betterment makes rollovers simple and efficient, minimizing your time spent and keeping costs low so we can help maximize your money’s growth. You can roll over your previous 401(k) into a Traditional or Roth IRA. Our 60-second rollover process is among the fastest in the industry. To get started, click here. Most 401(k) plans also allow you to roll over your previous 401(k) into your new plan, and you can contact our Customer Success Team at support@betterment.com to get started.  

It is important to note that when deciding whether to roll over an old 401(k) account or other retirement account, you should carefully consider your personal situation and preferences. Relevant factors may include that: (i) 401(k) accounts may offer greater protection from creditors than IRAs. (ii) In some cases, the ability to take penalty-free distributions at an earlier age or to defer minimum required distributions. (iii) Some 401(k) accounts may also allow for loans or distributions in a broader set of circumstances than IRAs. (iv) Some 401(k) plans may also offer specific educational and advisory services to participants that are unavailable to some IRAs. (v) Some 401(k) plans may have lower fees and expenses than some IRAs. (vi) Some IRAs may offer a broader range of investment options that some 401(k) plans. (vii) Special tax rules may apply to the rollover of employer securities.

You should research the details of your previous 401(k) and speak to a tax and/or other advisors about whether the features of your 401(k) are relevant to your personal situation. The rollover process is currently automated for rollovers from select providers. If you have a provider that is not part of our automated process, you will receive an email with a checklist for completing your rollover to Betterment. In processing your rollover request, Betterment will be acting at your direction.

This information was provided by Betterment LLC, a registered investment advisor.

Part 12: Access Additional Resources

Frequently Asked Questions
The Betterment Portfolio
Betterment for Business Resource Center
About Participant Advice
Video: What is a Betterment 401(k)?