Retirement Plans

How our recommendations for your retirement plan and income work

Getting started

How can I contribute to retirement accounts for my spouse or partner?

IRAs are titled in the name of an individual. If you’d like to make an IRA contribution for your spouse or partner at Betterment, you’ll need to have them open a Betterment IRA in their own Betterment account, with a separate email address as their username. Through the new login, you may link your shared bank account once more and fund your spouse's IRA through it, if applicable.

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How much can I contribute to an IRA and what is the deadline?

The annual limits for 2018 IRA contributions are $5,500 for individuals under 50 years old, and $6,500 for those who are 50 and over. The limit is assessed across all of your accounts, so if you have reached the limit with one provider you are not allowed to contribute to another account somewhere else. You can max out your IRA contributions by creating a new deposit in your Traditional IRA or Roth IRA. There are additional contribution limits to a Roth IRA, and deduction limits to a ...

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What is a Retirement Goal at Betterment?

To help you plan for retirement, Betterment recommends creating a retirement goal with any retirement accounts contained within it. Learn more about Betterment’s investment goals, including our advice on retirement goals. When viewing your retirement goal on the Summary, Portfolio, and Advice tabs of your Betterment account, you will see the goal can contain any Betterment accounts used for retirement (including IRAs and 401(k) plans) as well as external retirement accounts you have synced or ...

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How do I know what type of retirement account I have?

Knowing the type of retirement plan you currently have is an important first step in rolling that plan over to a qualified Betterment Traditional IRA or Roth IRA. The Roth versions of any of these plans will need to be rolled into a Betterment Roth IRA. Various plan types: 401(k): Standard pre-tax contributions made by the employee and often includes some matching by the employer. Roth 401(k) or "Designated Roth Account": After-tax contributions made by the employee. 403(b): Public schools, ...

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Can I add a joint account or trust to my Retirement goal?

Currently, joint accounts and trusts cannot be included within your primary retirement goal. We are constantly iterating on our product and hope to offer this ability soon.

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How do I move Betterment money to and from my Retirement goal?

Deposit or withdraw money from any of the accounts within your Retirement Goal by logging in. You can either make a new deposit, transfer or roll over a retirement account, or withdraw from there. Be aware, withdrawing from tax-advantaged accounts, like IRAs and 401(k)s, may result in tax penalties.

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How it works

My Retirement Goal risk rating seems incorrect. How can I tell?

We do our best to identify the holdings in your external accounts but the data we receive from other firms can sometimes be imperfect. If our assessment of your overall retirement goal risk seems incorrect or unintuitive, an appropriate next step is to review each external account you have synced to see if the investment holdings information (e.g., % of stocks, bonds, cash, etc.) we have received is accurately representing your true external account composition. If you feel like one of your ...

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Should I do anything in response to the overall risk assessment in my Retirement Goal?

Having retirement accounts in multiple places can make it harder to know where you stand with your overall investment risk, which is an important component of reaching your retirement savings goal successfully. The purpose of the risk assessment is to evaluate and highlight the overall risk of your retirement savings, including both your accounts held at Betterment and any external retirement accounts you have synced into the goal, so that you know where you stand. You should review the ...

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Can I have multiple scenarios in Betterment’s retirement planning advice?

At this time, Betterment's retirement planning advice can only account for one future scenario. Learn more about the

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Market interest rates are at historic lows right now, how do you account for this?

All of our projections are based on expected returns for the assumed stock/bond allocation. Returns are modeled as an excess return above the risk free rate curve we assume. Our risk-free rate curve is a forward curve based on the existing Federal Reserve H15 rates. This means our projections assume near-zero risk-free rates currently, but steadily increase to 3% over the next couple years. See more details about our Projection Methodology

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How will the information I enter into Betterment for advice be used?

At Betterment, the security of your personal information and assets are our primary concern. Like all information you give to Betterment, it will be secured and will not be sold, rented, or traded with any third party without your permission. We will use the information to help you determine how much money you may require to retire, as well as make recommendations on how to invest your money for retirement. You will always have access to update or clear this information as you would like. Read ...

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My recommended savings for retirement is not what I expected—why is that?

There are a number of assumptions for our retirement planning advice that you may want to review and/or modify. Your savings recommendation is based on the information about your existing investments and synced external accounts. Review these assumptions within your own account by navigating to your retirement goal's plan and select "Edit Assumptions." Learn more about the assumptions for our retirement planning advice.

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Retirement Goal Projections: After-tax vs Before-Tax

To help you understand your future retirement balance and spending ability, we let you project your retirement goal in two ways: before-tax and after-tax. Both options adjust for inflation, so you’re always looking at the forecasted “spending power” value of your money. Before-tax: Helps you forecast your retirement account balance over time. You can compare this to other projections or use it to get an idea of how your balance can grow. After-tax: Helps you forecast your retirement account ...

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Why is the retirement planning advice different after I sync external accounts?

Betterment gives you retirement planning advice based on both information you provide and extensive research that’s incorporated into our External accounts" and click “Remove account.” Your newly synced account may not be included in your retirement plan. From "Home", click Manage next to your External Accounts to associate a specific external account with a Goal.

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Managing my account

How do I calculate my Modified Adjusted Gross Income (MAGI) for Roth IRA purposes?

Your Modified Adjusted Gross Income (MAGI) is used to determine how much, if any amount, you are able to contribute to a Roth IRA. The calculation for your MAGI begins with your Adjusted Gross Income (AGI). From there, some modifications are made to your MAGI. Below are the most common modifications. For a step-by-step guide to calculating your MAGI, use Publication 590-A, Worksheet 2-1. Start with Your AGI: Find your Adjusted Gross Income (AGI). This can be found on IRS Form 1040, Page 2, Line ...

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How do I add other retirement income sources into Betterment’s retirement planning advice?

If you have other income sources expected in retirement, such as pension, rental or annuity income, Betterment can include them in addition to Social Security and portfolio withdrawals. After starting your retirement planning, click "Edit Assumptions" and enter the annual, pre-tax amount under in the other income sources field under "About Your Income." You can always sync additional retirement savings accounts by visiting “External Accounts.”

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How does Betterment handle Substantially Equal Periodic Payments (SEPP)?

What are Substantially Equal Periodic Payments? Substantially Equal Periodic Payments provide a way to withdraw money from your IRA prior to reaching age 59 ½ without paying the 10% early withdrawal penalty. In order to qualify, certain rules must be followed, including rules relating to the specific amount, frequency and duration of the payments. Although withdrawals will not be subject to the penalty, the recipient will still owe applicable ordinary income taxes (see important details below ...

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How do I change my employer plan contributions for non-Betterment plans?

If you have a retirement plan at work, whether it’s a 401(k), 403(b) or other type, your employer typically withholds (or “defers”) your contributions from your salary and directs those amounts directly into the plan. To change how much you contribute, you’ll need to determine how your employer controls these deferrals. Some employer plans offer a self-service online deferral percentage change. Others require you to contact the plan administrator or HR department to make changes. Changes could ...

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How do I change my Social Security assumptions?

To change your Social Security assumptions: Log into Betterment and navigate to your Retirement goal from the menu. Select the Retirement goal "Plan" and choose “Edit Assumptions.” Select “About your income” and you will be able to change your Social Security assumptions. For reference, you can download your Social Security data file from the Social Security Administration website, as well as see your earnings record.

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How do I change the assumptions in Betterment’s retirement planning advice?

Learn about all of the assumptions that go into Betterment’s retirement planning methodology. Many of the assumptions that we make can be modified by selecting your primary retirement goal from the menu and then "Plan". Once you click "Edit Assumptions" you'll be able to edit and review the following: Social Security assumptions Age you plan to retire Assumed lifespan Inflation rate Rate of return for synced external accounts Annual savings assumptions For more accurate retirement planning ...

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Retirement Income

When I use Retirement Income advice, do you send me RMDs?

We calculate RMDs for Traditional IRAs annually, and show the amount on your tax statement at the end of January. You can take this amount and set up automatic withdrawals at the frequency you like within Transfer, or take the withdrawal manually.

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How do I set up a retirement income goal?

To see our Safe Withdrawal advice, you first need to have a Retirement Income goal. Once created, use the tools on the goal's Plan to see recommended safe withdrawal advice even before you fund your account. To add a retirement income goal, first click "Add New" from the menu after logging in from a web browser. Or, from the mobile app, log in and click "Add goal/account." After you choose your account type (individual, joint, trust or IRA), you will choose the "Retirement" option and pick "No, ...

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When use the Retirement income feature, while reserving money to leave a legacy?

Our advice model does not currently account for leaving assets to your heirs, but we plan to add this in the future. For now, you can use the graphing capabilities on the Advice tab to estimate how much will be left at the end of the horizon given the withdrawals you enter. That being said, can also add beneficiaries to any of your Betterment accounts, which would supersede any will or trust.

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Can I collect retirement income from multiple accounts?

Yes-if you plan to draw income from both a Traditional IRA and a Roth account, for example, you will need to set up an automatic withdrawal from each one.

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What are Betterment's retirement income features for retirees?

For those in retirement, we offer advice on how much you can safely withdraw each month. Learn more about what you can expect when using your Betterment account for income in retirement. The “Monthly Safe Withdrawal” recommended amount on the Advice Tab for retirement income goals is based on our retirement income model that assumes you update your withdrawal amount and allocation at least annually according to our recommendations, and that your age and lifetime horizon are correct. The ...

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Can I withhold taxes from my withdrawals?

Tax withholding is the percentage of income tax that you elect to have withheld from your IRA distribution and sent directly to the IRS in an effort to mitigate your future tax liability. The amount you withhold, if any, may differ from your ultimate tax liability. If your withholding ends up being too much, you will be due a refund when you file your tax return. If your withholding ends up being too little, you will owe an additional amount to the government when you file your tax return. When ...

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