401(k) Plans at Betterment

Betterment can bill plan clients on behalf of advisors based on the agreed fee schedule. Fees can be paid by the employer (as part of the employer invoice) or deducted from participant accounts, depending on what the plan document allows. Advisors should confirm billing structure with their Betterment CSM.

Yes. Betterment schedules a participant education session at or around go-live, led by the Client Success Manager. Participants also have access to in-app retirement advice, educational videos, webinars, articles, and customized emails on 401(k)-related topics throughout the plan year.

The Betterment advisor dashboard provides: Plan metrics tracking and custom reporting Participant-level data and account visibility Document and notice management Support tab with contact details Compliance Hub for census uploads and questionnaire completion

Advisors will need to update Form ADV Part 2A and likely their client agreement to reflect the incorporation of Betterment Advisor Solutions into their practice, including how the firm uses Betterment's sub-advisory and brokerage services and how Betterment's fees are disclosed. Advisors should consult their compliance officer or attorney as circumstances vary.

Yes. Betterment offers an all-in-one platform spanning both retirement and wealth management. This allows advisors to service clients across both and provide a unified experience for plan sponsors who are also individual wealth clients.

Some of the key functions Betterment handles include: ADP/ACP nondiscrimination testing Top-heavy testing Contribution calculations Form 5500 preparation (signature-ready) Audit package preparation Various participant notices (including blackout notices) Compliance Hub census questionnaires For a complete list, please review our 401(k) administrative services terms.

DOL regulations require that employee deferrals and loan repayments be deposited into the plan as soon as administratively feasible, generally interpreted as within 7 business days for small plans. Late deposits are a compliance violation and can result in penalties. By integrating with your clients’ payroll provider, we’re able to automate contribution flows and help reduce the risk of late deposits.

Plan officials who "handle" plan funds must be covered by an ERISA fidelity bond — a form of insurance protecting the plan against fraud or dishonesty. The bond must cover at least 10% of funds handled, with a $500,000 cap ($1,000,000 for plans holding employer stock). Solo 401(k) plans are not subject to ERISA Title I requirements such as an ERISA Fidelity Bond.

The most common correction for a failed ADP/ACP test is refunding contributions to HCEs in the amount necessary to pass. Refunds must be made within 2.5 months of year-end to avoid a 10% excise tax (by March 15). Alternatively, plans can make a QNEC contribution to NHCEs to correct the failure. Safe Harbor plans generally sidestep this issue entirely.

Yes. The plan sponsor always retains some fiduciary responsibility under ERISA, including the obligation to select and monitor service providers and to ensure plan fees are reasonable. Delegating fiduciary functions reduces but does not eliminate sponsor liability. The specific scope of what Betterment assumes should be clearly defined in plan documents.

A 3(21) fiduciary offers investment advice but the plan sponsor retains ultimate decision-making authority and liability. A 3(38) fiduciary has full discretionary control over investment decisions and assumes the associated liability, relieving the sponsor. Three factors to consider before recommending a role: The sophistication of the sponsor's governance structure, thin committees with limited investment expertise may not be well-suited to a 3(21) relationship. Plan size and complexity. The ...

As limited 3(16) plan administrator, Betterment handles the agreed-upon operational and administrative fiduciary responsibilities: annual compliance testing (ADP/ACP, top-heavy), calculating contributions, preparing signature-ready Form 5500s, and delivering audit packages. This offloads significant administrative burden and liability from the plan sponsor. On the investment side, Betterment offers a turnkey 3(38) fund lineup or supports advisors in a 3(21) or 3(38) role on an open-architecture ...

Yes. Betterment offers an open-architecture platform allowing advisors to construct custom fund lineups or outsource the investment program to Betterment's 3(38) investing team.

Betterment supports 350+ payroll integrations, including a flagship integration with QuickBooks Online. For integrated payroll providers, participant accounts are created automatically, contribution rates sync without manual uploads, and plan eligibility is tracked automatically. Plans on non-integrated payroll providers can use our online manual file uploads.

Integrated payroll helps to reduce the plan sponsor's administrative burden and the risk of late deposits or data errors. Advisors should set this expectation during onboarding, sponsors on non-integrated providers will need to commit to a manual upload process for each payroll cycle. Helping a client switch to an integrated payroll provider (if they haven't already) can meaningfully improve their plan administration experience.

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 ...

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

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 ...

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 ...

Yes. Betterment encourages advisors to join the plan design review call, where compliance walks the sponsor through current plan provisions and captures any requested changes before the adoption agreement is drafted. This is a high-value touchpoint for advisors to ensure client preferences are properly reflected.

Participants cannot take distributions or change investment selections during the blackout, but paycheck contributions continue. ERISA requires advance notice to participants before any blackout. Once the wire from the prior recordkeeper clears and Betterment's compliance team completes its review of transfer files, assets are allocated and participants are notified. The goal is to wrap up the blackout within 10 business days of receiving transfer files.

If this would be your first client with Betterment, you can get in touch with us here. If you’re already using the Betterment platform for other 401(k) clients, you can either contact your Account Executive or submit a request for a new plan proposal in your advisor dashboard. Once the client signs the sales agreement, the plan sponsor needs to send deconversion documents to the prior recordkeeper; Betterment should be copied on those communications. From there, Betterment's onboarding team ...

Once sales agreements are signed, plans are assigned a dedicated onboarding specialist who serves as the single point of contact through setup. The process covers plan design, adoption agreement execution, payroll integration setup, and participant account creation.

Solo 401(k)s are available to self-employed individuals with no full-time employees other than a spouse. They're not just for full-time freelancers — high-income W-2 employees with side income (physicians, attorneys, executives with consulting LLCs) can qualify. Combined employee and employer contributions can reach up to $70,000+ for 2025, making them one of the highest-limit retirement vehicles available.

Annual maintenance is generally minimal, but once plan assets exceed $250,000, the plan must file Form 5500. The plan sponsor is responsible for filing Form 5500 for Solo 401(k) unlike the traditional 401(k) product where Betterment creates a signature-ready Form 5500. Betterment's Solo 401(k) offering is fully digital, and is now available through national advisor networks.

Employee deferral: up to $23,500 (plus $7,500 catch-up for ages 50–59 and 64+; $11,250 super catch-up for ages 60–63). Employer contribution: up to 25% of net self-employment income (20% for sole proprietors and partnerships). Total combined limit: $70,000 (or more with catch-ups).