Advisor Plan Design

Advisor Plan Design

Q: What plan design options does Betterment support?

A: Betterment supports a wide range of plan design features, including:

• Safe Harbor and traditional discretionary match structures
• Auto-enrollment and auto-escalation (QACA)
• Eligibility requirements and vesting schedules
• Profit sharing
• Roth contributions
• 401(k) match on student loan payments

Q: When should I recommend a Safe Harbor plan vs. a traditional plan?

A: Safe Harbor plans automatically satisfy ADP/ACP and top-heavy nondiscrimination tests, which is particularly valuable for small plans with a high ratio of HCEs or owner-heavy workforces. There are two main Safe Harbor contribution options, traditional match/non-elective and QACA match/non-elective. Traditional plans offer more budget flexibility but require annual compliance testing, which can result in corrective distributions to HCEs if tests fail. Safe Harbor is typically recommended when the sponsor values simplicity and predictability over contribution flexibility.

Q: What SECURE 2.0 changes should I be discussing with clients?

A: Several provisions are now in effect or taking effect in 2025–2026:

• Roth catch-up mandate (2026): High earners (>$150,000 in FICA wages in prior year) must make catch-up contributions on a Roth basis. Advisors should confirm payroll systems and recordkeepers are ready.
• Super catch-up contributions: Participants ages 60–63 may contribute up to $11,250 in catch-up contributions (vs. $7,500 for ages 50–59 and 64+).
• Long-term part-time (LTPT) employees: Starting in 2025, employees who worked 500+ hours in two consecutive 12-month periods must be eligible to defer — even if they haven't met standard eligibility requirements.
• Tax credits: Plans with auto-enrollment may qualify for up to $16,500+ in SECURE 2.0 tax credits over three years.

Q: What tax credits are available for new plans?

A: Under SECURE 2.0, small businesses with fewer than 50 employees may be eligible for up to 100% of plan startup costs, capped at $5,000/year for three years. Businesses with 51–100 employees may receive a 50% credit. An additional auto-enrollment credit of $500/year for three years is available for plans with auto-enrollment. Many plan sponsors qualify for $15,000+ in total credits over the first three years; we have a calculator you can use with clients to help determine what they may be eligible for.