Transactions: An Overview
We provide an overview for just how long each type of transaction will take.
TABLE OF CONTENTS
Table: Transaction Timelines
Individual Cash Reserve
Joint Cash Reserve
|Individual investing||1-2 days||
|Individual Cash Reserve
(Inclusive of money held in cash goals)
|Joint Cash Reserve
(Inclusive of money held in cash goals)
|Betterment Checking||1-2 days||1-2 days||1-2 days||1-2 days||–||1-2 days|
|Non-Betterment checking||1-2 days||1-2 days||1-2 days||1-2 days||
² Within accounts held at Betterment, we generally only allow transfers involving individual and joint investing accounts if you are listed as married to the account owner. Note: This requirement does not apply if you created the joint account and are the primary account owner. Confirm spouse details or, if you are not married, email firstname.lastname@example.org and we can help you with a manual transfer. These manual transfers generally take 2-3 weeks to complete.
³ A Same-Day Transfer generally allows for cash transfers between your joint and individual Cash Reserve accounts, or between your cash goals within your Cash Reserve account, up to an aggregate daily transaction limit per client to be completed on the same day. Please note that some transfers may take longer, particularly if you have recently deposited funds into your Cash Reserve account.
⁴ If the transaction is initiated on the Betterment side, the timeline is 4-5 business days. If initiated from your external bank’s side, it’s 1-2 business days.
Table: Transaction Limits
Betterment Account Transaction Limits
|Limit of # of Transactions||$ Limit|
|Investing Deposits||Unlimited||$300,000 per day**|
|Cash Reserve Deposits||Unlimited||$300,000 per day**|
|Cash Reserve Withdrawals||Unlimited||Unlimited|
|Individual Investing > Individual Investing Transfer||1 per day||Unlimited|
|Joint Investing > Joint Investing Transfer||1 per day||Unlimited|
|Individual Investing < > Joint Investing Transfer*||1 per day||Unlimited|
|Investing < > Cash Reserve Transfer*||5 per day||Unlimited|
|Individual Cash Reserve < > Joint Cash Reserve Transfer||Unlimited||Unlimited|
|External Bank Account > Checking (ACH Push)||Generally no limits||Generally no limits|
|Withdrawals From Checking||Unlimited||$10,000****|
|Checking ATM Withdrawals||Unlimited||$500 per day***|
|Deposits Into Checking (ACH Pull)||Unlimited||$25,000****|
|Checking Point-Of-Sale Transactions||Generally no limits||$2,000 per day****|
*Within accounts held at Betterment, we generally only allow transfers involving individual or joint investing accounts if you are listed as married to the account owner. Note: This requirement does not apply if you created the joint account and are the primary account owner.Confirm spouse details or, if you are not married, email email@example.com and we can help you with a manual transfer.
**This limit does not apply to wire transfers.
***This limit includes any ATM surcharge fees charged by the ATM operator. Remember that we’ll reimburse ATM fees at any ATM worldwide where Visa is accepted.
****Checking limits are $25,000 per deposit and $10,000 per withdrawal, subject to change at Betterment’s discretion. In certain situations the limits may also be temporarily adjusted to accommodate a specific transaction.
Any time there is a transaction in your Betterment account (like a deposit, withdrawal, or change in your allocation), we buy and sell shares of ETFs on your behalf in the proper amounts. Betterment takes care of all the trading for you. We also trade in order to rebalance your account, to change investment options, or otherwise to further the investment objectives that you specify through your account.
We generally trade within 1-2 business days of transaction initiation, and only within market hours. Withdrawals initiated thirty minutes or less before markets close (typically 4:00 PM ET) will not transact until the next business day. Trades that are triggered by multiple Client actions in a single day (e.g., multiple portfolio allocation changes in different goals), generally will not be placed until the next day.
You can view the details of any transaction within your account.
Your allocation is the mix of stock and bonds ETFs within your investing portfolio.
When you change your target allocation, you alter the proportions of stock and bond ETFs that you aim to own. The number of shares we’ll then buy or sell depends on the size of your portfolio and the size of the allocation change.
Day trading means buying and selling the same security on the same day. To prevent day trading, we allow you to make only one allocation change in a legal account per day.
Deposits and Withdrawals
Deposits and withdrawals to and from investing goals result in the purchase or sale of shares of ETFs. Money that you deposit is used to buy shares and money that you withdraw comes from the proceeds of shares sold. The number of shares bought or sold is dependent on the size of your transaction and your allocation of stocks and bonds.
Deposits are automatically invested within 1-2 business days into your portfolio, based on our recommended mix of ETFs.
Withdrawals from investing goals typically take 4-5 business days to reach your linked checking account, which includes trade settlement and transmission through the ACH network back to your bank. If additional information is needed to process your withdrawal, you’ll hear from us via email.
Transfer Between Accounts
You can transfer between two individual investing goals, between two joint investing goals, or between an individual investing goal and a joint investing goal—each once per day. Transfers between goals typically take 1-2 business days to complete.
You can transfer between an individual investment goal and your individual Cash Reserve, or between a joint investment goal and your joint Cash Reserve—up to 5 times per day. These transactions generally take 1-2 business days to complete.
Within accounts held at Betterment, we only allow transfers involving individual or joint investing accounts if you are listed as married to the account owner. Note: This requirement does not apply if you created the joint account and are the primary account owner. Confirm spouse details, or, if you are not married, email firstname.lastname@example.org and we can help you with a manual transfer.
Dividend Reinvestment and Rebalancing
There are two other main transaction types that occur in your investing accounts which are not a direct result of any action you take on your side.
When ETFs you own issue dividends, we will automatically reinvest the cash proceeds into more stock and bond ETFs, based on your allocation settings.
We will also rebalance by selling and buying stock and bond ETFs when needed. Rebalancing is how we help keep your holdings from drifting away from your target allocation.
Transfers Involving IRA accounts
You can transfer funds between Betterment IRAs and most non-trust taxable accounts by logging in from a web browser and selecting Transfer or rollover > Transfer within Betterment.
Transfers involving IRAs will follow the same timelines and transaction limits as all other transfers at Betterment, and IRAs are always an Individual Investing account. You may refer to the Transaction Timelines and Transaction Limits tables for the expected timeline and limits on transfer frequency amounts depending on which taxable account you are transferring to or from.
Within accounts held at Betterment, we generally only allow transfers involving individual and joint investing accounts if you are listed as married to the account owner. Note: This requirement does not apply if you created the joint account and are the primary account owner. Confirm spouse details, or, if you are not married, email email@example.com and we can help you with a manual transfer.
Transfers From Taxable Accounts To IRA Accounts
Transfers from Cash Reserve and other cash goals do not require the selling of shares, but please note that Betterment does not offer a cash position in IRA accounts. All transfers from Cash Reserve accounts and other cash goals into IRA accounts will result in funds being invested in the market according to the stock and bond allocation that is set for your IRA account.
Betterment will sell your shares in a way that seeks to minimize and defer taxes for you. We sell shares in a way that is intended to generate short term capital losses, long term capital losses, long term capital gains and then lastly, short term capital gains. Losses can generally be used to offset gains.
The algorithm exhausts each category before moving to the next. Within each category, lots purchased at the highest price are sold first. Ultimately, we are working to maximize your losses and minimize your gains, resulting in a lower tax burden. Learn more about how Betterment makes transactions more tax-efficient.
Betterment also calculates and displays an estimate of your tax impact for any transaction on the website when you type in an amount, before you commit to the transaction.
Transfers From IRA Accounts To Taxable Accounts
You can transfer funds from your IRA into a taxable investing goal or cash goal, however, taxes and penalties may apply. Please note that since we are not registered tax advisors, we cannot give specific tax advice about how your distribution might be taxed. For the best information about your individual circumstances, please consult a qualified tax professional.
Below are some general rules and resources regarding distributions from IRAs:
According to the IRS:
- For Roth IRAs, if you satisfy the requirements, qualified distributions are tax-free. However, a 10% penalty generally applies to the earnings if you withdraw before age 59.5.
- For Traditional IRAs, a 10% additional tax generally applies if you withdraw or use IRA assets before you reach age 59½.
During this process, you will be given the option to:
- Elect to withhold 10% or more (up to 100%) of the distribution;
- Elect not to withhold at all (0%).
Tax withholding is the percentage of income tax that you elect to have taken out of your IRA distribution and sent directly to the IRS as a prepayment. How much you should withhold is based upon your expected tax liability from the IRA distribution or from other sources of income, and since Betterment is not a tax advisor, we cannot assist in determining this figure for you.
You can learn more about these rules in the following IRS publication: Publication 590-B (2019), Distributions from Individual Retirement Arrangements (IRAs)
Cash Reserve Transactions
You can view the details of any transaction within your account.
Deposits and Withdrawals
Deposits into Cash Reserve and withdrawals out of Cash Reserve both generally take 1-2 business days to complete.
Unlike transfers from a savings account at a typical bank, Cash Reserve has no transfer limits on how many times you can withdraw from your account.
Withdrawing funds soon after a deposit can trigger a temporary hold on your withdrawal. This hold should last no longer than 5 business days. If additional information is needed to process your withdrawal, you’ll hear from us via email.
Transfers Between Cash Reserve And Investing Accounts
You can transfer between an investment goal and your individual Cash Reserve, or vice versa, up to 5 times per day. These transactions generally take 1-2 business days to complete.
Within accounts held at Betterment, we generally only allow transfers involving individual or joint investing accounts if you are listed as married to the account owner. Note: This requirement does not apply if you created the joint account and are the primary account owner. Confirm spouse details or, if you are not married, email firstname.lastname@example.org and we can help you with a manual transfer.
Deposits and Withdrawals
Transfers initiated into Checking from within your Betterment account—drawing from a linked external bank account—will add to your Checking balance by the following business day if placed by 4 PM ET. However, these funds will be in a “pending” status until the funds are fully available to you to use. The pending status usually lasts for 4 to 5 business days. We’ll display an estimated completion date for any deposits you make into Checking.
If you initiate a transfer into Betterment from another bank’s side—either through their website or with assistance from your other bank— the funds will typically be fully available to you within 1 to 2 business days.
Withdrawals to a linked non-Betterment bank account generally take 1 to 2 business days to fully complete.
In some situations, withdrawals may take longer. An example of this would be if you make a deposit and then withdraw it to your linked external bank account immediately, which could lead to your withdrawal taking up to 6 business days to be fully received.
Transfers Between Checking and Other Accounts
If you use Betterment Checking to fund an investment goal or Cash Reserve, expect those transactions to take 1-2 business days.
Daily ATM Withdrawal Limit: $500
This limit includes any ATM surcharge fees charged by the ATM operator. Remember that we’ll reimburse ATM fees at ATMs worldwide. Your card will only work at ATMs where Visa debit cards are accepted.
Daily Debit Card Transaction Limit: $2,000
Transferring To And From Your Linked External Bank Account: Transfer limits are $25,000 per deposit and $10,000 per withdrawal, subject to change at Betterment’s discretion. In certain situations the limits may also be temporarily adjusted to accommodate a specific transaction.
Contact us if you have questions about transaction amount limits and how they may apply to your specific situation.
To help customers conveniently move their cash, transfers between your joint and individual Cash Reserve accounts, or between your cash goals within your Cash Reserve account are generally eligible for a Same-Day Transfer.
Please note that some transfers may take longer, particularly if you have recently deposited funds into your Cash Reserve account. Refer to the eligibility requirements in our Same-Day Transfer terms and conditions for questions regarding what qualifies as a Same-Day Transfer.
Video: How Does Betterment Move My Money?
Betterment Cash Reserve
Betterment Cash Reserve (“Cash Reserve”) is offered by Betterment LLC. Clients of Betterment LLC may participate in Cash Reserve through their brokerage account held at Betterment Securities. Neither Betterment LLC nor any of its affiliates is a bank. Through Cash Reserve, clients’ funds are deposited into one or more banks (“Program Banks”) where the funds earn a variable interest rate and are eligible for FDIC insurance. Cash Reserve provides Betterment clients with the opportunity to earn interest on cash intended to purchase securities through Betterment LLC and Betterment Securities. Cash Reserve should not be viewed as a long-term investment option.
Funds held in your brokerage accounts are not FDIC‐insured but are protected by SIPC. Funds in transit to or from Program Banks are generally not FDIC‐insured but are protected by SIPC, except when those funds are held in a sweep account following a deposit or prior to a withdrawal, at which time funds are eligible for FDIC insurance but are not protected by SIPC. See Betterment Client Agreements for further details. Funds deposited into Cash Reserve are eligible for up to $1,000,000.00 (or $2,000,000.00 for joint accounts) of FDIC insurance once the funds reach one or more Program Banks (up to $250,000 for each insurable capacity—e.g., individual or joint—at up to four Program Banks). Even if there are more than four Program Banks, clients will not necessarily have deposits allocated in a manner that will provide FDIC insurance above $1,000,000.00 (or $2,000,000.00 for joint accounts). The FDIC calculates the insurance limits based on all accounts held in the same insurable capacity at a bank, not just cash in Cash Reserve. If clients elect to exclude one or more Program Banks from receiving deposits the amount of FDIC insurance available through Cash Reserve may be lower. Clients are responsible for monitoring their total assets at each Program Bank, including existing deposits held at Program Banks outside of Cash Reserve, to ensure FDIC insurance limits are not exceeded, which could result in some funds being uninsured. For more information on FDIC insurance please visit www.FDIC.gov. Deposits held in Program Banks are not protected by SIPC. For more information see the full terms and conditions and Betterment LLC’s Form ADV Part II.
Checking accounts and the Betterment Visa Debit Card provided by and issued by nbkc bank, Overland Park, Kansas, Member FDIC. Funds deposited into Checking will be eligible for up to $250,000 of FDIC insurance. Betterment Checking made available through Betterment Financial LLC. Neither Betterment Financial LLC, nor any of their affiliates, is a bank. Betterment Financial LLC reimburses ATM fees and the Visa® 1% foreign transaction fee worldwide, everywhere Visa is accepted. Checking accounts do not earn APY (annual percentage yield). Betterment Cash Reserve and Betterment Checking are separate offerings and are not linked accounts.
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