401Ks

SECURE 2.0 deadlines for 2025: What advisors need to know to support their clients Savvy financial advisors can leverage their knowledge of SECURE 2.0 to increase client loyalty and serve workplace plans. Here’s how. The SECURE 2.0 Act was passed in 2022, but its provisions are still being implemented. Designed to encourage more employees to save for retirement in a workplace-sponsored plan, the legislation makes it easier for employees to build emergency savings and also pay down student loans. Why is SECURE 2.0 important for advisors? Many of your clients could benefit from the SECURE 2.0 provisions, but they may need help navigating multiple decisions. In the 2024 Betterment at Work Retirement Readiness Annual Report, we found that 37% of respondents reported not having an emergency fund 41% of respondents report they are currently managing student debt With provisions that address both emergency savings and student loans, as an advisor, you can be a trusted guide for clients looking to manage a stressful financial life. SECURE 2.0 provisions that may impact your clients Whether you’re advising an entire retirement plan for a workplace or serving individual clients, the following provides you with an overview of some of the most important SECURE 2.0 provisions that may impact your clients’ financial plans. Student loan matching contributions Effective date: January 1, 2024 (new IRS guidance issued for January 2025) What’s changing: Employers can treat an employee's qualified student loan payments as elective deferrals for the purpose of making matching contributions to retirement plans, such as 401(k), 403(b), SIMPLE IRA, and governmental 457(b) plans. Purpose: This optional provision aims to assist employees who prioritize student loan repayments over retirement savings, enabling them to receive employer matching contributions even if they are not contributing directly to their retirement plan. How you can help clients: Not all employers will offer this provision. If you’re advising plan administrators, you can coach them through launching a student-loan match and help them educate their employees. For individual clients, you can help them find the right balance between retirement savings and student loan payments. Automatic enrollment for new retirement plans Effective date: January 1, 2025 What’s changing: New 401(k) and 403(b) plans established after December 29, 2022, must automatically enroll eligible employees. The initial default contribution rate must be at least 3%, increasing by 1% annually until it reaches at least 10%, but not more than 15%. Exemptions: Businesses with 10 or fewer employees, those in operation for less than three years, church plans, and governmental plans are exempt from this requirement. How you can help clients: Help your clients calculate how much they need to save. The default contribution may be appropriate for some, but not all. Additionally, you can ensure your clients are considering their workplace plan assets along with their other savings to build a healthy, holistic portfolio. Catch-up contributions (enhanced for ages 60–63) Effective date: January 1, 2025 What’s changing: Individuals aged 60 to 63 can make higher catch-up contributions to 401(k), 403(b), and governmental 457(b) plans. The limit increases to the greater of $10,000 or 150% of the standard catch-up amount, which is projected to be $11,250 in 2025. Additional notes: This enhanced limit is available only to qualified individuals who are 60 to 63. Upon reaching age 64, the standard catch-up limit applies. How you can help clients: Given the detailed nuances of this provision, you can prepare clients who are in their late 50s or early 60s plan for it. You can help them do the math and determine the right amount of catch-up contribution for them. Emergency savings accounts linked to retirement plans Effective date: January 1, 2025 What’s changing: Employers may offer pension-linked emergency savings accounts (PLESAs) to non-highly compensated employees. Employees can contribute up to $2,500 to these accounts on an after-tax basis, with the ability to make penalty-free withdrawals. Employer matching: Employers may offer matching contributions on these emergency savings, similar to standard retirement contributions. How you can help clients: It may seem simple, but some of your clients, especially if you advise workplace plans, may not have emergency savings. Or if they do, there is a good chance many don’t know how much to save. You can provide advice to ensure these clients set aside adequate savings for the unexpected. How SECURE 2.0 creates growth opportunities for financial advisors Given the need for education around SECURE 2.0, financial advisors are well-positioned to capitalize on two growth opportunities: Build client loyalty Advisors are in a position to help individual clients navigate retirement saving decisions related to their workplace plans. For example, clients may benefit from being advised on the following provisions: Catch-up contributions: Individuals aged 60 to 63 can make higher catch-up contributions, but there are IRS guidelines that your clients need to follow. Student loan matching contributions: If your clients’ employers offer student loan matching, you can help clients determine how much they should pay towards their student loans versus funding their retirement plans. Increase retirement plan business SECURE 2.0 makes it easier for workplaces to offer plans and increase participation, creating growth opportunities for advisors who serve retirement plans. Here are two ways your firm may benefit from SECURE 2.0 while advising plans: Increased plan participation: Automatic enrollment under SECURE 2.0 means more employees saving for retirement—creating more opportunities to engage, educate, and support participants with long-term financial planning. Build loyalty with plan administrators: The legislation comes with many new provisions for plan administrators to track. Advisors who are well-versed in SECURE 2.0 can establish a reputation as a trusted expert for workplace plan administrators, helping them and their employees understand the legislation. We’re here to help your firm grow Helping you grow your RIA your way. Betterment Advisor Solutions is the all-in-one custodial platform purpose-built for independent RIAs. To learn more about our digital platform, get in touch with a member of our team. Looking for knowledge to grow your business? From understanding SECURE 2.0 legislation to the latest advisor tech and everything in between, our experts at Betterment have resources to help you grow your firm. See all free advisor resources. Don’t serve retirement plans yet? Read our blog on the convergence of wealth management and retirement planning.

The financial advisor’s guide to offering retirement plans [with planning checklist] Offering 401(k)s is no longer a niche service for financial advisors—it’s a powerful strategy for practice growth and retention. See how to get started. In this guide, we introduce topics such as: How large is the retirement plan market opportunity for advisors? What are the benefits for financial advisors who offer retirement plans? What are common roadblocks for financial advisors looking to offer retirement plans? How can advisors get started offering and managing 401(k) plans (with planning checklist)? What are the 5 key attributes to look for in a 401(k) platform partner? How large is the retirement plan market opportunity for advisors? Retirement plans have become a critical, expected part of modern financial planning. As business owners face state mandates and look for competitive benefits, clients increasingly expect their advisor to have a comprehensive solution for workplace retirement. If you don't currently offer 401(k) plans, you may be missing a significant opportunity: wealth clients could look elsewhere, and potential business-owner clients may go to competitors who can provide integrated retirement solutions. The market growth for this service is undeniable. Cerulli Associates expects there will be more than one million 401(k) plans by the end of the decade—an increase of 36% from 2025 to 2029. And advisors are giving business away if they don’t offer a retirement plan. 57% of defined contribution recordkeepers report that the majority of their plans are sold through advisors, according to the Cerulli report. Now is the time to ensure you have a retirement solution and a partner that can help you capture this growth. What are the benefits for financial advisors who offer retirement plans? Offering 401(k)s is no longer a niche service—it’s a powerful strategy for practice growth and retention. New revenue and retention: Retirement plans create a stable, recurring revenue stream. They also help retain wealth clients by ensuring they don’t look to competitors who offer a complete suite of services. Cross-selling opportunities: Plan participants are a natural source of future wealth clients. By managing both the plan and individuals’ portfolios, you create deeper, stickier, and more valuable relationships. Meeting client demand and state mandates: The adoption of 401(k)s, especially by small businesses, is rising (driven partly by the SECURE Act and state mandates). Offering these solutions solidifies your position as a holistic financial partner. Better client service: High-net-worth business owners often prefer consolidating all their finances under one trusted advisor. Referring these plans out to other providers limits your growth and can erode the overall trust in your relationship. Down-market growth: Small and mid-sized businesses are often underserved. Advisors who enter this space with an efficient 401(k) plan partner are poised for scalable growth. What are common roadblocks for financial advisors looking to offer retirement plans? Many advisors hesitate to enter the retirement space due to past challenges or intimidation. The good news? Modern, technology-forward platforms like Betterment have solved most significant pain points. What are the steps to set up a retirement plan for your firm? Starting can be intimidating, but we’re here to help. Use the checklists below for each of the three steps to launch a 401(k) offering at your firm. Step 1: Get familiar with plan basics Before you offer a retirement plan, take the time to learn about plan types, how they work, and your role. Checklist: Plan components: Learn the key components of a 401(k) plan, including plan design (eligibility, match, vesting), investment options, recordkeeping, administration, and compliance. Types of plans: Know the differences between plan types like safe harbor plans, Simple 401(k)s, and traditional and Roth 401(k)s. The role of TPAs: Explore your options for third-party administrators (TPAs) and understand the pros and cons of bundled vs. unbundled when it comes to handling plan administration and investments. (Note: At Betterment, we’re flexible and can work bundled or unbundled.) Your role: Understand your role as an advisor vs. a plan fiduciary. In many cases, you can offload fiduciary and administrative responsibilities to your platform partner (such as Betterment), reducing your liability and workload. Step 2: Choose the right partner Choosing your plan provider and tech platform might be the most important decision you make. Take the time to reflect on the following areas. Checklist: Turnkey platform: Select a provider and tech platform that simplifies the process by handling recordkeeping, compliance testing, and Form 5500 filings. Digital onboarding: Onboarding should be paperless, fast, and intuitive. You want your clients to have a seamless experience that differentiates you from legacy providers. Trustworthy business partner: Ensure the partner won’t compete for your client relationships, which is important for trust and long-term growth of your offering. Employee engagement: By incorporating built-in participant education and a modern digital experience, you can increase adoption and directly reduce the education burden on your team. Scalable and competitive: The technology and process that your partner brings to the table should be designed for efficiency and automation, making it profitable even for smaller firms. Step 3: Prospect and position Once you select your partner, it’s time to grow your business. Checklist: Prospecting process: Start with your own book. Ask existing wealth clients if their businesses offer retirement plans, or if they are considering one. Sales language: Make it easy for prospects to see the value you offer. Use simple positioning language like: “We offer a turnkey 401(k) solution designed for small businesses that takes the administrative burden off your plate.” Marketing materials: Leverage marketing resources or one-pagers from your platform partner to help explain the value to business owners. Bonus tips: How to market to clients who own businesses With a sea of legacy retirement plan providers in the market, you have an opportunity to differentiate on ease and support. Use these three tips to clearly communicate your value and help clients understand the pain point you solve for them. Highlight turnkey administration: Emphasize that providers like Betterment handle compliance, testing, and filings—removing traditional headaches. Showcase digital onboarding: Make it clear that plans can be launched quickly without stacks of paperwork. Address prior pain points directly: Acknowledge that legacy TPAs and recordkeepers have caused frustration, and explain how your model solves those issues. Retirement is no longer an optional add-on for advisors who want to future-proof and scale their practice. Choosing the right partner can make offering a 401(k) plan a profitable and client-centric way to drive growth. Ready to start or reconsider your retirement offering? Contact a Betterment Advisor Solutions representative today to see a quick demo of our turnkey platform.

How plan conversions work at Betterment: A guide for advisors Your step-by-step guide to 401(k) plan conversions — what to expect, who does what, and how to keep things on track. Plan conversions are one of the most complex transitions in the 401(k) world, and can be confusing for all involved: advisors, sponsors, and participants. Below, we’ll walk you through the full process so you can set accurate expectations with your plan sponsors and their participants from day one. Your client’s onboarding specialist will also reach out to you and your client to schedule a kickoff call to discuss the onboarding process together. This call covers an overview of the onboarding process, estimated timelines, key milestones, and any questions you may have so that everyone is aligned. Key: 🟠 Plan Sponsor | 🔵 Betterment | ⭐ Where advisors can help move things along Step 1: Connect with the prior recordkeeper 🟠 The plan sponsor sends deconversion documents to the prior recordkeeper to officially initiate the transfer. Betterment should be included on those communications. 🔵 From there, your Betterment onboarding rep takes the lead, coordinating blackout period dates, ensuring required participant blackout notices are distributed (ERISA mandates advance notice), and aligning on asset liquidation and wire timing. ⭐ Advisors can help here by making sure the plan sponsor understands the urgency of getting those deconversion documents over to the prior recordkeeper as quickly as possible.These tasks account for a significant portion of the timeline. Recordkeepers move at their own pace and compliance timelines are non-negotiable, so getting the deconversion documents submitted promptly is one of the most important things to do right out of the gate. Step 2: Review and finalize plan design and adoption agreement 🔵 Betterment's 401(k) Compliance Team provides a summary of the plan's current provisions and our onboarding rep walks the plan sponsor through it on a plan design review call to make sure everything looks correct and any changes are captured (advisors are encouraged to join this call as well). Once that conversation and attestation are complete, Betterment drafts the adoption agreement. 🟠 The plan sponsor reviews and signs the adoption agreement. This document must be fully executed before onboarding can move forward. ⭐ This is one of the most common places where timelines slip. Advisors can make a big difference by helping to keep the plan sponsor engaged and responsive. A slow turnaround on the adoption agreement can push the entire go-live date. Step 3: Connect payroll 🟠 The plan sponsor kicks off the payroll integration directly in their Betterment dashboard and provides the necessary credentials and access. 🔵 Once initiated, the Betterment onboarding rep loops in our Payroll Integrations Team to work with the payroll provider on any more in-depth setup needs. Betterment will keep the plan sponsor and advisor in the loop throughout this process, scheduling a payroll integration call if needed. If the plan is not on an integrated provider, the plan sponsor will handle manual file uploads going forward. ⭐ Advisors can help by setting expectations with the sponsor upfront about the difference between integrated and non-integrated payroll and what each means for their day-to-day administrative experience. Step 4: Create participant accounts and invite employees to claim 🔵 If the plan has a payroll integration, Betterment creates participant accounts automatically through the census data pulled via the integration. If not, accounts are created manually, which requires additional time and coordination. 🟠 In the onboarding dashboard, there is a task to invite employees to Betterment. When the plan sponsor completes this task, it triggers an automated email from Betterment to employees. They are instructed to claim their account, at which point they can review their deferral rate and make any updates before the first payroll run. ⭐ Advisors can help by encouraging the plan sponsor to remind employees to keep an eye out for their account access emails and to take action promptly. Step 5: Adjust deferral rates This is one of the most important things to communicate proactively to your plan sponsors and participants. Betterment does not map deferral rates from the prior recordkeeper. 🔵 Participants are prompted to review their current rate and update it to match what they had before or choose a new amount. 🟠 Plan sponsors should let their employees know as well so there are no surprises on the first payroll run. ⭐ Advisors can reinforce this message with both the sponsor and participants ahead of the switch. If the plan has auto-enrollment, all participants (including existing ones) will be enrolled at the plan's default auto-enrollment rate upon moving to Betterment. Getting ahead of this conversation will save a lot of confusion. Step 6: Finalize fund lineup and map assets 🔵 Betterment applies the advisor-provided fund lineup and maps incoming assets to the chosen QDIA. Participants are defaulted into the QDIA and are prompted to review and update their investment elections after claiming their accounts. Here’s a short demo video of how they can do this. If the plan is using Betterment’s portfolios, participants are defaulted into the Core portfolio and can change their investment selection the same way. It is important to note that this is not a participant-level like-for-like fund mapping, which is one of the most common misconceptions we see in a conversion. ⭐ Advisors should make sure the fund lineup is finalized during the sales process, before onboarding begins. Advisors are also best positioned to proactively explain the QDIA mapping process to sponsors and participants so it does not come as a surprise. Step 7: Transfer funds and complete compliance review 🔵 The prior recordkeeper liquidates plan assets and wires the funds to Betterment. While the wire may arrive on a specific date, the plan will remain in blackout until our 401(k) Compliance Team has reviewed the transfer files. These files tell us how the wire amount is to be allocated across participants, and once the review is complete, assets are allocated accordingly. Our goal is to wrap up the blackout period within 10 business days of receiving the transfer files, though this is dependent on the quality and completeness of the reporting and can vary. ⭐ This step is largely on Betterment to manage, but advisors can be a helpful resource if there is additional intervention needed with the prior recordkeeper or if the plan sponsor needs extra support navigating the blackout period communications. A couple of important things to communicate to plan sponsors and participants about the blackout period: Participants can continue to make new contributions throughout the blackout. The blackout restricts their ability to take distributions or change their investment selections, but paycheck contributions will continue to run. Step 8: Invest assets and go-live 🔵 Once the wire clears and Compliance completes their review, assets are invested per the approved fund lineup. Participants are notified and can log in to view their accounts, confirm their investments, and make any final adjustments. Step 9: Schedule a participant education session 🔵 Before or around the go-live date, Betterment's Client Success Manager will reach out to the sponsor and advisor to schedule a participant education session to help employees understand the plan, how to enroll, and what to expect. ⭐ Advisors are encouraged to join as a co-host, and while it is not required, it is a great way to showcase the advisor-Betterment partnership and be available to field any investment-related questions in real time. What to tell your plan sponsors before conversion begins Setting expectations early makes the whole process smoother for everyone. Here are the key takeaways: Getting deconversion documents to the prior recordkeeper quickly and executing the adoption agreement promptly are the two biggest things a plan sponsor can do to keep the timeline on track. Deferral rates will not carry over and participants will need to update them when they receive account access. Fund mapping goes to the QDIA, not like-for-like from the prior plan. During the blackout period, participants cannot take distributions or change their investment elections, but contributions will continue as normal. The blackout will remain in place until Betterment's 401(k) Compliance Team completes their review of the transfer files, with a goal of wrapping up within 10 business days of receipt.