What are suspended funds?
Suspended funds are payroll contributions that cannot be allocated to a participant’s account due to an unresolved issue.
Common reasons include:
- Loan payments for loans that are already paid off or missing in the system
- Participants who do not yet have accounts set up
- Participants under age 18 or otherwise ineligible to participate
When Betterment cannot allocate payroll funds to a participant account:
- The funds are marked as Suspended (Unresolved)
- If unresolved after 70 days, the funds are automatically moved to the plan’s suspense account (relinquished) and must be resolved outside of Betterment
How does Betterment notify plan sponsors?
When suspended funds occur, Betterment sends an email to the plan sponsor detailing the unresolved transactions for that payroll.
To review and resolve them:
- Log in to the Plan Sponsor Dashboard
- Navigate to Payroll
- Select the applicable payroll effective date
- View unresolved 401(k) transactions and available resolution options at the bottom of the page
What do the statuses mean and how are they resolved?
Suspended
The funds cannot be allocated due to an issue (typically related to participant data or eligibility).
- If no action is taken, the funds will be relinquished after 70 days.
Resolved
The underlying issue has been corrected, and the funds have been successfully allocated to the participant’s account.
Relinquished
If funds remain unresolved after 70 days, they are automatically moved to the plan’s suspense account.
- Plan sponsors may also request relinquishment before the 70-day mark by contacting Betterment Support.
- This is NOT a final state. While the funds may be used toward future employer contributions from the suspense account, the participant is still owed those contributions outside of the Betterment system (typically via payroll correction or refund).
Completed Post Relinquishment
Along with “Resolved” this is a potential final status.
It confirms that the plan sponsor has resolved the issue outside of Betterment and returned the funds to the affected participant.
What are common cases that cause funds to be suspended?
1. Employee data errors (integration issues)
Examples include:
- Missing date of birth
- Invalid address (e.g., P.O. Box)
- SSN mismatch
- Employee sync disabled
Once the data issue is corrected, funds are typically allocated the next business day.
2. Participant account not yet created
Sometimes payroll contributions are submitted before the participant account exists in Betterment.
To resolve:
- Update the participant via the payroll integration sync, or
- Manually create the participant in the Plan Sponsor Dashboard
If the funds have already been relinquished, a corrective deposit will be required.
3. Loan payments for paid-off or missing loans
Payments may be submitted for:
- A loan that has already been fully repaid
- A loan that does not exist in Betterment
These cases often require:
- Manual relinquishment to the plan’s suspense account
- A payroll refund to the affected participant
4. Ineligible employee contributions
If a payroll provider allows an ineligible employee to defer, but Betterment correctly reflects them as ineligible, the funds cannot be allocated.
These contributions must be refunded to the participant.