Betterment Editors

What are unallocated funds? Nov 5, 2025 10:00:00 AM Unallocated funds are non-invested assets within the plan. Many 401(k) plans have unallocated funds as a result of daily plan administration. Plan sponsors can view the balances of their unallocated funds under the 401(k) Plan tab >> Activity in their Plan Sponsor Dashboard. There are three types of unallocated funds: Forfeiture funds Suspense funds Cash funds We’ll describe each of these below. What are Forfeiture funds? Where do they come from? Forfeitures can arise in two main ways: When participants are auto-enrolled in the plan and choose to request their money back (within the 90-day permissible window under EACA), any employer contributions associated with those returned participant contributions become Forfeiture funds. Unvested contributions: When terminated participants have unvested contributions, take a distribution, or incur a 5-year break in service, and have unvested employer contributions, those unvested employer contributions associated with the terminated participants’ distribution become Forfeiture funds. How can Forfeiture funds be used? The way they can be used is written into the plan document. Generally speaking, they can be used to: Pay eligible plan expenses. Offset employer matching or profit sharing contributions. Allocate to eligible participants as additional employer contributions. Forfeitures cannot be used as elective deferrals. Timing requirements Depending on the plan document, Forfeiture funds generally should be used before the end of the following plan year in which the forfeiture occurred. What are Suspense funds? Where do they come from? Suspense funds mainly arise due to excess employer contributions or over-contribution of the employer match due to pre-funding the employer match for the year or profit-sharing (including the IRS 415(c) limits). How can suspense funds be used? Suspense funds can only be used to offset employer contributions or allocated to eligible participants as additional employer contributions. They cannot be used to pay for plans fees. Timing requirements These funds should be used as soon as administratively possible, but typically no longer than the end of the plan year in which they occur. What are Cash funds? How do they come up? Assets in the cash fund arise from unexpected operational situations resulting in excess funds in the 401(k) plan trust, including duplicate payroll, payroll and compliance corrections, and other miscellaneous discrepancies. How can they be used? Generally speaking, these funds can be used to correct the applicable error or returned to the plan sponsor as a “Mistake of Fact” (if the error qualifies for this treatment under IRS guidance - such as a duplicate payroll). If you have an employer match, you can also elect to use funds to offset employer contributions. How can unallocated funds be used towards payroll at Betterment? Based on the plan sponsor’s direction, Betterment will automatically apply unallocated funds to offset employer contributions during upcoming payrolls. The order of operations of fund usage is: Suspense, Forfeiture (the oldest eligible year then current year), then Cash funds. Betterment will automatically apply the regulatory timing restrictions of when certain funds need to be used by. If the unallocated funds cannot cover the entire employer contribution portion of a particular payroll, an entire employer portion of a particular payroll (or if there are no remaining unallocated funds), then the plan’s bank account(s) will be used to cover the outstanding amount. Unallocated funds can only be applied to a specific employer portion of a payroll if the automated usage setting is turned on before the payroll is approved (otherwise the funds would be applied to the next payroll). Plan sponsors can find details on the amount of each unallocated fund that was applied towards a payroll on the Payroll Overview page in their dashboard. If a plan does not want unallocated funds to be applied automatically towards payroll, but would rather use funds for a specific payroll, a “Mistake of Fact” return, or towards a year-end contribution, then the plan should reach out to Plan Support. Reports guide To see granular information on how funds were generated or used, utilize the Forfeiture fund, Suspense fund, and Cash fund reports. Use the Unallocated fund summary report to view the yearly balances of each fund. Glossary (for terms used in the reports) Correction_redistribution: Typically a payroll correction to add money towards a specific employees’ payroll contributions that should have originally been made. Compliance_inflow: Inflow to participants – anything related to year-end compliance testing that causes funds to be added to the plan/participants (i.e. True ups, QNECs, ADP/ACP, Top Heavy, Lost Earnings). Corrective_transfer: Outflow from participants – compliance outflow (i.e. ADP Test, ACP Test, 415 Annual Additions Excess, Funding in Excess of Formula). Component_reversal: Typically a payroll correction to reverse payroll contributions that should not have been made. Year_end_contribution: Employer contributions only (typically annual additions added during compliance season but can also occur at anytime to correct issues). Interested in bringing a Betterment 401(k) to your organization? Get in touch today at 401k@betterment.com.

Understanding your 401(k) Plan Document Nov 5, 2025 8:00:00 AM Betterment will draft your 401(k) plan document, but it’s important that you understand what it includes and that you follow it as written. What exactly is a Plan Document? A 401(k) plan is considered a qualified retirement plan by the Internal Revenue Service (IRS), and as such, must meet certain requirements to take advantage of significant tax benefits. Every 401(k) retirement plan is required to have a plan document that outlines how the plan is to be operated. The plan document should reflect your organization’s objectives in sponsoring the 401(k) plan, including information such as plan eligibility requirements, contribution formulas, vesting requirements, loan provisions, and distribution requirements. As regulations change or your organization changes plan features and/or rules, the plan document will need to be amended. Your provider will likely draft your plan’s document, but because of your fiduciary duty, it is important that you as plan sponsor review your plan document, understand it, and refer to it if questions arise. Whether you are a small business or a large corporation, failure to operate the plan in a manner consistent with the document as written can result in penalties from the IRS and/or the Department of Labor (DOL). Understanding Your Fiduciary Responsibilities Although any given 401(k) plan may have multiple (and multiple types of) fiduciaries based on specific plan functions, the plan document identifies the plan’s “Named Fiduciary” who holds the ultimate authority over the plan and is responsible for the plan’s operations, administration and investments. Typically the employer as plan sponsor is the Named Fiduciary. The employer is also the “plan administrator” with responsibility for overall plan governance. While certain fiduciary responsibilities may be delegated to third parties, fiduciary responsibility can never be fully eliminated or transferred. All fiduciaries are subject to the five cornerstone rules of ERISA (Employee Retirement Income Security Act) when managing the plan’s investments and making decisions regarding plan operations: Acting solely in the interest of plan participants and their beneficiaries and with the exclusive purpose of providing benefits to them; Carrying out their duties prudently; Following the plan documents (unless inconsistent with ERISA); Diversifying plan investments; and Paying only reasonable plan expenses. One of the best ways to demonstrate that you have fulfilled your fiduciary responsibilities is to document your decision-making processes. Many plan sponsors establish a formal 401(k) plan committee to help ensure that decisions are appropriately discussed and documented. Which Type of 401(k) Plan is Best for Your Organization? The plan document will identify the basic plan type: Traditional 401(k) plans provide maximum flexibility with respect to employer contributions and associated vesting schedules (defining when those contributions become owned by the employee). However, these plans are subject to annual nondiscrimination testing to ensure that the plan benefits all employees—not just business owners or highly compensated employees (HCEs). Safe Harbor 401(k) plans are deemed to pass certain nondiscrimination tests but require employers to contribute to the plan on behalf of employees. This mandatory employer contribution must vest immediately—rather than on a graded or cliff vesting schedule. QACA Safe Harbor plans are an exception, which may have up to a two-year cliff vesting schedule. Profit-sharing 401(k) plans include an additional component that allows employers to make more significant contributions to their employee accounts. Besides helping to attract and retain talent, small businesses can find this feature especially helpful In highly profitable years, since it reduces taxable income. There is no one plan type that is better than another, but this flexibility allows you to determine which type makes the most sense for your organization. Eligibility Requirements to Meet Your Needs Although the IRS mandates that employees age 21 or older with at least 1 year of service are eligible to make employee deferrals, employers do have considerable flexibility in setting 401(k) plan eligibility: Age -- employers often choose to adopt a minimum age of 18. Service -- employers can establish requirements on elapsed time or hours. Entry date -- employers may allow employees to participate in the plan immediately upon hiring but often require some waiting period. For example, employees may have to wait until the first of the month or quarter following their hire date. This flexibility allows employers to adopt eligibility requirements appropriate to their business needs. For instance, a company with high turnover or lots of seasonal workers may institute a waiting period to reduce the number of small balance accounts and the associated administrative costs. Automatic Enrollment Is Now the Standard for 401(k) Plans Under the SECURE 2.0 Act, which became effective on December 29, 2022, automatic enrollment has become the new standard. The provision requires that 401(k) plans established after that date were required to include automatic enrollment no later than January 1, 2025. Eligible employees will have a set percentage of each paycheck automatically deferred and contributed to the plan—unless they choose to opt out or adjust their contribution rate. Certain plans, such as those created before that date or sponsored by small businesses, churches, or government employers, are exempt and may continue to use voluntary enrollment. The benefit of automatic enrollment is that human inertia means most employees take no action and start saving for their future. In fact, according to the Congressional Research Service (2024), automatic enrollment 401(k) plans have participation rates of about 90%, compared to about 70% for plans with voluntary (opt-in) enrollment. Employee Contribution Flexibility Provides Valuable Flexibility The plan document will specify the types of contributions (or “elective deferrals”) that eligible employees can make to the plan via payroll deduction. Typically these will be either pre-tax contributions or Roth (made with after-tax dollars) contributions. Allowing plan participants to decide when to pay the taxes on their contributions can provide meaningful flexibility and tax diversification benefits. Elective deferrals are often expressed as either a flat dollar amount or as a percentage of compensation. Employee contribution limits are determined each year by the IRS. The plan document must specify whether the plan will allow catch-up contributions for those age 50 and older. Able and/or Willing to Contribute to Employee Accounts? The plan document will also include provisions regarding employer contributions, which can be made on either a matching or non-matching basis. Matching contributions are often used to incentivize employees to participate in the plan. For example, an employer may match 50% of every $1 an employee contributes, up to a maximum of 6% of compensation. For traditional 401(k) plans, matching contributions can be discretionary so that the employer can determine not only how much to contribute in any given year but whether or not to contribute at all. As stated above, matching employer contributions are required for Safe Harbor 401(k) plans. The plan document may also permit the employer to make contributions other than matching contributions. These so-called “nonelective” contributions would be made on behalf of all employees who are considered plan participants, regardless of whether they are actively contributing. Vesting Schedules and Employee Retention Vesting simply means ownership. Employees own, or are fully vested, in their own contributions at all times. Employers with traditional 401(k) plans, however, often impose a vesting schedule on company contributions to encourage employee retention. Although there are a wide variety of approaches to vesting, one of the most common is to use a graded vesting schedule. For instance, an employee would vest in the employer contribution at a rate of 25% each year and be 100% vested after 4 years. Employer contributions as part of Safe Harbor 401(k) plans are vested immediately, aside from QACA Safe Harbor plans. Let Betterment help you create a 401(k) that works for you and your employees As a full-service provider, Betterment aims to make life easy for you. We will draft your plan document based on your preferences and our industry expertise of best practices. We will work with you to keep your plan in compliance and can prepare amendments based on your changing needs. Want to learn more about offering a Betterment 401(k)? Get in touch.

A 50-state guide to state-mandated retirement plans [2025] Oct 29, 2025 9:00:00 AM All but three states have either active mandates in place or are working towards implementing mandated retirement programs. Check your state to see how your business may be impacted. Table of contents: All active state mandate programs In-progress state mandate programs States with legislation being considered Unknown state mandate programs The retirement landscape is changing rapidly, with many Americans living longer but saving less for their golden years. One of the most significant developments in this space has been the rise of state-mandated retirement plans. These plans are designed to provide essential benefits to workers who may not have access to them through their employer. With a growing number of private workers not having access to these crucial benefits, states are increasingly requiring businesses to provide retirement plans to employees. In 2015, the Department of Labor (DOL) issued guidance to support the states' efforts to help promote retirement benefits within their respective states. What exactly are state-mandated retirement plans? In recent years, more states have passed legislation requiring businesses to provide retirement benefits for their employees. In these states, employers have the choice between enrolling their workers in the state-sponsored program or establishing their own workplace retirement plan through providers like Betterment. A state-sponsored plan usually involves an Individual Retirement Account (IRA) set up by the employer for participants to contribute. However, certain features may vary between states, so it's a good idea to research your state's specific program to ensure compliance. All but three states are currently working on legislation to implement these plans, which means that more and more Americans will have access to the retirement benefits they need. However, it's important to stay up-to-date on these changes, as failing to comply with the new rules could result in hefty fines. For more details on how state-mandated plans could impact you, read: What state-mandated plans could mean for your small business. All active state mandate programs The following states have enacted legislation and have either implemented or are in the process of implementing a state-mandated program. California Plan Name: CalSavers Status: Mandate in place Deadlines: Deadline passed for 5+ employees; December 31, 2025, for 1-4 employees Details: Not all employers are required to participate. Only employers who do not sponsor a retirement plan and have one or more California employees must join CalSavers. Fines: $250 per eligible employee Illinois Plan Name: Illinois Secure Choice Status: Mandate in place Deadlines: Deadline passed for 5+ employees Details: Not all employers are eligible. Only private-sector employers who do not offer a qualified retirement plan, had at least five employees in every quarter of the previous calendar year, and have been in business for at least two years must facilitate Illinois Secure Choice. Fines: $250 per employee for the first calendar year the employer is non-compliant Oregon Plan Name: OregonSaves Status: Mandate in place Deadlines: Deadline passed for 1+ employees Details: All Oregon employers are required by law to facilitate OregonSaves if they don’t offer a retirement plan for their employees. Fines: $100 per affected employee, with a $5,000 maximum fine per year Connecticut Plan Name: MyCTSavings Status: Mandate in place Deadlines: Deadline passed for 5+ employees Details: Eligible Connecticut businesses are required to facilitate MyCTSavings if they don’t offer a retirement plan and have 5 or more employees. Fines: Penalties may be imposed. Bill is currently in the legislature. Colorado Plan Name: Colorado SecureSavings Program Status: Mandate in place Deadlines: Deadline passed for 5+ employees Details: All Colorado employers who have been in business for at least 2 years, have 5 or more employees, and don’t offer a qualified retirement plan for their employees are required by law to facilitate Colorado SecureSavings. Fines: $100 per affected employee with $5,000 maximum fine per year Maine Plan Name: Maine Retirement Savings Program Status: Mandate in place Deadlines: Deadline passed for 5+ employees Details: Every Maine employer with 5 or more employees will need to facilitate the program if they don’t already offer their own qualified retirement savings plan. Fines: Penalties for failing to enroll employees go into effect on July 1, 2025, as follows: $20 per employee from July 1, 2025, to July 30, 2026 $50 per employee from July 1, 2026, to July 30, 2027 $100 per employee on or after July 1, 2027 Virginia Plan Name: RetirePath Status: Mandate in place Deadlines: Deadline passed for 25+ employees Details: State law requires Virginia employers with 25 or more eligible employees who have operated for 2 or more years and not offered a qualified, employer-sponsored retirement plan must now register and facilitate RetirePath. Fines: $200 per eligible employee New Jersey Plan Name: RetireReady NJ Status: Mandate in place Deadlines: Deadline passed for 40+ employees; November 15, 24 for 25+ employees Details: Every New Jersey employer with 25 or more employees will need to register with the program if they don't already offer their own qualified retirement savings plan. Fines: Businesses that don’t follow state-mandated retirement legislation within one year will receive a written warning. Each following year of non-compliance will result in fines of: 2nd year: $100 per employee 3rd and 4th years: $250 per employee 5th year and beyond: $500 per employee Delaware Plan Name: Delaware EARNS Status: Mandate in place Deadlines: October 15, 2024 for 5+ employees Details: Every Delaware employer with five or more employees will need to facilitate the program if they don’t already offer their own tax-qualified retirement plan. Fines: $250 per affected employee, with $5,000 maximum fine per year Maryland Plan Name: Maryland Saves Status: Mandate in place Deadlines: December 31, 2024 for 1+ employees Details: Businesses are required to register if they have been in operation for at least 2 calendar years, have at least one employee over the age of 18, and use an automated payroll system. Fines: Maryland does not impose a penalty, instead, they use an incentive, offering businesses that enroll $300 per year, waiving the annual filing fee for Maryland businesses. Vermont Plan Name: Vermont Saves Status: Mandatory for Vermont employers with 5+ employees who do not offer a qualified retirement plan. Deadlines: March 1, 2025 for 5+ employees Details: Employees are automatically enrolled in a Roth IRA with a default contribution rate of 5% that increases by 1% annually up to 8%, unless they opt out or select a different rate. Employers are not required to contribute but must facilitate payroll deductions. The program is free for employers and integrates with existing payroll systems. Fines: $10 per employee before October 1, 2025, then $20 per employee until September 30, 2026. After October 1, 2026 employers could pay up to $75 per employee. New York Plan Name: New York State Secure Choice Savings Program Status: Mandatory for eligible employers to offer a retirement plan or enroll workers in the state’s Secure Choice program. Deadlines: Employers with 30 employees must enroll by March 18, 2026 Employers with 15-29 employees must enroll by May 15, 2026 Employers with 10-14 employees must enroll by July 15, 2026 Details: If you’re an employer in New York, state laws require you to offer the Secure Choice Savings Program if you have had 10+ employees during the entire prior calendar year, have been in business for at least two years, and have not offered a qualified retirement plan during the prior two years. Fines: Information not available at this time. Rhode Island Plan Name: RISavers Status: Mandatory for employers with 5+ employees who do not offer a qualified retirement plan. Deadlines: Implementation in progress Details: Private-sector employers with five or more employees will be required to offer a qualified retirement plan or opt into the state-run program. Fines: Information not available at this time. In-progress state mandate programs Nevada Plan Name: Nevada Employee Savings Trust Status: Will be mandatory Deadlines: July 1, 2025 for 1,000+ employees; January 1, 2026 for 500-999 employees; July 1, 2026 for 100-499 employees; Jan 1, 2027 for <100 employees Details: In 2023, the Nevada legislature passed SB305 which mandates the establishment of a retirement savings program for private sector employees. Fines: Information not available at this time. Massachusetts Plan Name: Massachusetts Defined Contribution CORE Plan Status: Nonprofit mandatory only Deadlines: Currently effective, but no deadline yet Details: Massachusetts nonprofit organizations with 20 employees or fewer may be eligible to adopt the CORE Plan. The CORE Plan is structured as a 401(k) Multiple Employer Plan (MEP). The MEP structure allows each adopting employer to join the CORE Plan under one plan and trust by executing a Participation Agreement. Fines: Not applicable. Minnesota Plan Name: Minnesota Secure Choice Retirement Program Act Status: Will be mandatory Deadlines: Expected to launch by Jan 1, 2025 Details: On May 19, 2023, Governor Walz signed into law a bill establishing the Minnesota Secure Choice Retirement Program. Employers with 5 or more covered employees that do not sponsor a retirement plan for their employees are required to participate in the plan. Fines: Information not available at this time. Hawaii Plan Name: Hawaii Retirement Savings Program Status: Will be mandatory Deadlines: Implementation in progress Details: The Hawaii Retirement Savings Program is a state-facilitated payroll-deduction retirement savings plan where individuals can choose to opt into the program. Employers will be required to provide covered employees with written notice that they may opt into the program, withhold covered employees’ contribution amount from their salary or wages, and transmit covered employees’ payroll deduction contributions to the program. Fines: Information not available at this time. Washington Plan Name: Washington Saves Status: Will be mandatory Deadlines: Expected to launch Jan 1, 2027 Details: Employers must offer their employees access to a state-facilitated IRA if they don’t offer a retirement savings plan. Employees would be enrolled automatically unless they opt out. The program is slated to launch in 2027 and Washington will continue to offer its small-business retirement marketplace in the meantime. Fines: Penalties beginning after January 1, 2030. New Mexico Plan Name: New Mexico Work and Save IRA Status: Voluntary Deadlines: 7/1/24 deadline, but still voluntary Details: Work and Save is a voluntary savings program for private-sector and nonprofit employers and employees and the self-employed facilitated through a Roth Individual Retirement Account. Fines: Not applicable. Missouri Plan Name: Missouri Show-Me MyRetirement Savings Plan Status: Voluntary Deadlines: Expected to launch September 1, 2025 Details: Missouri introduced HB 1732 in 2022, which would create a voluntary MEP for small employers with 50 or fewer employees. Fines: Not applicable. Pennsylvania Plan Name: Keystone Saves Status: Will be mandatory Deadlines: To be determined pending bill passage by Pennsylvania State Senate Details: Employers will be required to offer a state-sponsored IRA or other qualified retirement plan. Employers do not have to participate if they have an established retirement program, have fewer than five employees, or have been in business less than 15 months. Fines: According to the current bill, covered employers shall not be subject to a penalty for not participating in the program. Georgia Plan Name: Peach State Saves Status: Voluntary Deadlines: To be determined pending bill passage Details: In February 2025, Georgia introduced SB 226, requiring businesses with 5+ employees and over one year in operation to offer a state-sponsored IRA or another retirement plan unless they already have one.The default payroll deduction is a Roth IRA with a 5% contribution rate. The state may add a traditional IRA option and adjust the contribution rate, increasing it annually by up to 1% (maximum 10%). Fines: Not applicable. States with legislation being considered The following states have legislation currently being considered for state-mandated reprograms: Alaska, Arizona, Arkansas, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Montana, Nebraska, New Hampshire, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, Tennessee, Texas, Utah, West Virginia, Wisconsin, Wyoming Unknown state mandate programs The following states have not yet made clear if they intend to mandate a state retirement program. We will actively update this article as legislation changes. Alabama Florida South Dakota What do state-mandated plans mean for your business? Now is the time to plan ahead if you do not offer a retirement plan for your employees, especially if you operate in a state with an upcoming mandate deadline. In most cases, you’ll have one of two options: Implement your state’s plan: You’ll need to follow your state’s procedures for enrolling and offering a retirement plan, usually an IRA, to your employees. Implement a 401(k) plan: A second option is to skip the state plan, and instead, offer a 401(k) plan from a private provider like Betterment at Work. The benefits of offering a 401(k) Offering a 401(k) has become a tablestakes benefit as employers attempt to attract and retain talent in today’s competitive environment. State mandated plans are designed by the government to address a lack of savings among employees. The purpose is admirable, but state mandated plans may lack some of the benefits of a modern, 401(k) plan, which include: Higher contributions limits to help people save more. A wider range of investment options depending on the number of funds available. The option to provide an employer matching contribution. (Did you know? A 401(k) employer match is the #2 most desired benefit among employees. Learn more.) Learn how to offer a modern 401(k) today At Betterment, we make it easy for small and mid-market businesses to provide a scalable retirement plan. With a Betterment 401(k), you get: Simplified administration, payroll integrations, fiduciary support, and compliance testing Customizable plan features and optional employee benefits Service and support at every step Learn more

Smart savings, lasting impact: Why a cost-efficient 401(k) matters more than ever Oct 21, 2025 9:33:43 AM This open enrollment, see how a transparent, low-fee 401(k) can help attract talent, save on costs, and build a stronger benefits foundation. Key takeaways Open enrollment season is a chance to strengthen your benefits and show employees you’re invested in them. A cost-efficient 401(k) helps form the foundation of financial wellness for both employees and employers. Lower fees can mean faster growth for savings and greater transparency for plan sponsors. Automation reduces administrative burden and compliance risk, freeing HR to focus on people. A modern, low-cost 401(k) helps attract and retain talent while reinforcing a culture of care. We like to think of open enrollment season as a company’s annual wellness checkup. It’s when employees review benefits, make updates, and—intentionally or not—evaluate how much their employer is investing in them. That’s especially important now. Health costs are rising fast: U.S. employers expect a 5.8% jump in health insurance costs in 2025.Those increases come on top of already difficult trends in premiums, deductibles, and out-of-pocket burden. For plan sponsors, it’s a good time to reassess your benefits offerings. After all, benefits can influence your ability to attract top talent, stay for the long haul, or return to the job hunt. And few benefits make a bigger impression than your 401(k) plan. Why a cost-efficient 401(k) is the foundation of financial wellness If your company were a home, your 401(k) would be part of its foundation—something solid and well-designed, built to support the floors that come after it. The same is true of a cost-efficient 401(k): It provides structure and stability for your employees’ financial futures, while helping your business stand on solid financial ground. And just like any well-built home, it’s the details that matter. With a 401(k), that includes things like low fees and transparent pricing, flexible plan design, automation, compliance, and support when you need it. Lower 401(k) fees mean more value for every dollar High plan fees can quietly eat into employees’ savings and employers’ budgets alike. But with a cost-efficient 401(k), your contributions and your employees’ can grow faster. Betterment at Work focuses on transparency—no hidden fees, no surprise markups—so both sponsors and participants can see where their money goes and how it’s working for them. Automated 401(k) administration saves time and reduces errors Running a 401(k) shouldn’t feel like constant maintenance. Betterment at Work can help you stay on top of payroll syncing, compliance requirements, and plan administration—to free up time for your HR team to focus on people, not paperwork. And our Hassle-Free Compliance Guarantee means you can count on a smooth audit season. How a cost-efficient 401(k) helps boost employee retention Today’s employees aren’t just comparing salaries—they’re comparing overall experiences. And much of that boils down to employee benefits. A modern, low-cost 401(k) shows you’re invested in their future. Think of your plan like a blueprint for financial wellness. By offering additional benefits, like an employer match, you’re underlining your commitment to your team and their financial future. Our modern platform and low-fee structure is designed for employees who want to see their money work as hard as they do. And for employers, it’s a sign of fiscal responsibility—proof that you’re building something meant to last. Efficiency is empathy: Building better 401(k) plans for people and business Offering a cost-efficient 401(k) is about improving outcomes—not just reducing expenses. Lower fees can help increase employee retirement savings, while streamlined administration reduces workload and compliance risk. This Open Enrollment, evaluate whether your plan’s structure, fees, and technology are helping both your employees and your organization achieve better results.

Pros and Cons of the New York State Secure Choice Savings Program Oct 16, 2025 9:00:00 AM Answers to small businesses' frequently asked questions Key takeaways: New York now requires eligible employers to offer a retirement plan or enroll workers in the state’s Secure Choice program. Enrollment deadlines begin in 2026, starting with employers of 30+ employees. Secure Choice is simple but limited, with lower contribution caps and no employer match. 401(k) plans provide more flexibility, tax advantages, and investment options. Employers should act soon to choose the option that best fits their business. The New York State Secure Choice Savings Program was established to help private-sector workers in the state who have no access to a workplace retirement savings plan. Originally enacted as a voluntary program in 2018, Gov. Kathy Hochul signed a law on Oct. 22, 2021, that requires all employees of qualified businesses be automatically enrolled in the state's Secure Choice Savings Program. After running a pilot program, New York Secure Choice launched in October 2025. What does this mean for employers? If you’re an employer in New York, state laws require you to offer the Secure Choice Savings Program if you: Had 10 or more employees during the entire prior calendar year Have been in business for at least two years Have not offered a qualified retirement plan during prior two years The New York Secure Choice program will notify employers required to facilitate the program, but they can also enroll by the following dates: Employers with 30 employees must enroll by March 18, 2026 Employers with 15-29 employees must enroll by May 15, 2026 Employers with 10-14 employees must enroll by July 15, 2026 If you’re wondering whether the Secure Choice Savings Program is the best choice for your employees, read on for answers to frequently asked questions. 1. Do I have to offer my employees the Secure Choice Savings Program? No. State laws require businesses with 10 or more employees to offer retirement benefits, but you don’t have to elect the Secure Choice Savings Program if you provide a 401(k) plan (or another type of employer-sponsored retirement program). 2. What is the Secure Choice Savings Program? The Secure Choice Savings Program is a Payroll Deduction IRA program—also known as an “Auto IRA” plan. Under an Auto IRA plan, if you don’t offer a retirement plan, you must automatically enroll your employees into a state IRA savings program. Specifically, the New York plan requires employers to automatically enroll employees at a 3% deferral rate. As an eligible employer, you must set up the payroll deduction process and remit participating employee contributions to the Secure Choice Savings Program provider. Employees retain control over their Roth IRA and can customize their account by selecting their own contribution rate and investments—or by opting out altogether. 3. Why should I consider the Secure Choice Savings Program? The Secure Choice Savings Program is a simple, straightforward way to help your employees save for retirement. According to SHRM, it is managed by the program’s board, which is responsible for selecting the investment options. The state pays the administrative costs associated with the program until it has enough assets to cover those costs itself. When that happens, any costs will be paid out of the money in the program’s fund. 4. Are there any downsides to the Secure Choice Savings Program? Yes, there are factors that may make the Secure Choice Savings Program less appealing than other retirement plans. Here are some important considerations: The Secure Choice Savings Program is a Roth IRA, which means it has income limits—If your employees earn above a certain threshold, they will not be able to participate. For example, single filers with modified adjusted gross incomes of more than $144,000, as of 2022, would not be eligible to contribute. If they mistakenly contribute to the Secure Choice Savings Program—and then find out they’re ineligible—they must correct their error or potentially face taxes and penalties. However, 401(k) plans aren’t subject to the same income restrictions. New York Secure Choice is not subject to worker protections under ERISA—Other tax-qualified retirement savings plans—such as 401(k) plans—are subject to ERISA, a federal law that requires fiduciary oversight of retirement plans. Employees don’t receive a tax benefit for their savings in the year they make contributions—Unlike a 401(k) plan—which allows both before-tax and after-tax contributions—Illinois only offers after-tax contributions to a Roth IRA. Investment earnings within a Roth IRA are tax-deferred until withdrawn and may eventually be tax-free. Contribution limits are far lower—Employees may save up to $6,000 in an IRA in 2022 ($7,000 if they’re age 50 or older), while in a 401(k) plan employees may save up to $20,500 in 2022 ($27,000 if they’re age 50 or older). So even if employees max out their contribution to the Secure Choice Savings Program, they may still fall short of the amount of money they’ll likely need to achieve a financially secure retirement. No employer matching and/or profit sharing contributions—Employer contributions are a major incentive for employees to save for their future. 401(k) plans allow you the flexibility of offering employer contributions; however, the Secure Choice Savings Program does not. Limited investment options—Secure Choice Savings Program offers a relatively limited selection of investments. 5. Why should I consider a 401(k) plan instead of the Secure Choice Savings Program? For many employers—even very small businesses—a 401(k) plan may be a more attractive option for a variety of reasons. As an employer, you have greater flexibility and control over your plan service provider, investments, and features so you can tailor the plan that best meets your company’s needs and objectives. Plus, you’ll benefit from: Tax credits—Thanks to the SECURE Act, you can now receive up to $15,000 in tax credits to help defray the start-up costs of your 401(k) plan over three years. Plus, if you add an eligible automatic enrollment feature, you could earn an additional $1,500 in tax credits over the course of three years. Tax deductions—If you pay for plan expenses like administrative fees, you may be able to claim them as a business tax deduction. With a 401(k) plan, your employees may also have greater: Choice—You can give employees, regardless of income, the choice of reducing their taxable income now by making pre-tax contributions or making after-tax contributions (or both!) Not only that, but employees can contribute to a 401(k) plan and an IRA if they wish—giving them even more opportunity to save for the future they envision. Saving power—Thanks to the higher contributions limits of a 401(k) plan, employees can save thousands of dollars more—potentially setting them up for a more secure future. Plus, if the 401(k) plan fees are lower than what an individual might have to pay with New York Secure Choice that means more employer savings are available for account growth. Investment freedom—Employees may be able to access more investment options and the guidance they need to invest with confidence. Case in point: Betterment offers expert-built, globally diversified portfolios (including those focused on making a positive impact on the climate and society). Support—401(k) providers often provide a greater degree of support, such as educational resources on a wide range of topics. For example, Betterment offers personalized, “always-on” advice to help your employees reach their retirement goals and pursue overall financial wellness. Plus, we provide an integrated view of your employees’ outside assets so they can see their full financial picture—and track their progress toward all their savings goals. 6. What action should I take now? If you decide that New York’s Secure Choice Savings Program is most appropriate for your company, visit the New York Secure Choice website to learn more. If you decide to explore your retirement plan alternatives, talk to Betterment. We can help you get your plan up and running —and aim to simplify ongoing plan administration. Plus, our fees are at one of the lowest costs in the industry. That can mean more value for your company—and more savings for your employees. Get started now.

How to implement 401(k) auto-escalation Aug 6, 2025 10:00:00 AM Historically, employers have had the choice to add automatic escalation to their 401(k) plans, but now SECURE 2.0 is requiring it to help people save. If you are faced with implementing automatic escalation, we've got you covered with advice on how to approach the change, and most importantly, how to communicate it to your employees. How SECURE 2.0 approaches automatic escalation Under SECURE 2.0, in addition to requiring automatic enrollment at a default rate between 3% and 10%, 401(k) plans are required to automatically escalate contributions at 1% per year to at least 10% (but no more than 15%). As always, employees can change their contribution rate or opt out of the plan at any time. Automatic escalation is a requirement for plans with an initial effective date on or after December 29, 2022. Businesses in existence for less than three years, as well as those with 10 or fewer employees, are exempt. The provision itself is effective on January 1, 2025. Consider this when setting your maximum escalation rate When you implement automatic escalation, you’ll need to decide your maximum rate, from 10% up to 15%. We like to think about automatic enrollment and automatic escalation together. Consider your default automatic enrollment rate when determining the limit to your escalation rate. For example, if you have a default enrollment rate of 8%, then a 15% escalation maximum rate might make sense, giving employees more room to grow their savings. Whereas a plan with a 3% default enrollment rate may want to consider a lower maximum escalation rate. Also, consider your employer match, if you offer one. Most experts recommend saving at least 10-15% of your salary for retirement, and this includes the employer match. For example, if you are matching 5% and your automatic enrollment default rate is 8%, any employee who does not change their default rate is saving 13% of their income. Every company is different. It’s important to review different potential scenarios and keep in mind what your employees will respond best to when setting these default enrollment and escalation rates. Employee communications When it comes time to implement automatic escalation, how you communicate the change, along with any other plan changes, to your employees is incredibly important. If an employee doesn’t understand why the change is happening, they may fear it or be surprised to see an increased contribution if they were not expecting it. Instead, take the time to explain the purpose of automatic escalation. Consider this sample language when implementing the change with your employees: Recently, a new law was implemented called the SECURE 2.0 Act. Its purpose is to help Americans save more for retirement. Part of the Act that we’ll be adopting is called automatic escalation. Automatic escalation increases an employee’s contribution rate to their 401(k) plan by 1% each year until the contribution reaches [INSERT YOUR PERCENTAGE]. It’s designed to help everyone participating in our 401(k) to build retirement savings. Most experts recommend saving at least 10-15% of your annual income for retirement and automatic escalation helps get closer to that amount without additional effort. But don’t worry: If you are not comfortable with the escalation, you have the option to change your contribution rate or opt out of the plan at any time. We’re excited about this change and are proud to continue to evolve our 401(k) program to make saving easier. Feel free to edit this language to fit your organization’s needs, including any mandatory communications. What’s most important is that your employees see automatic escalation as a positive change.

Why Adding 529s to Your Financial Benefits Can Appeal to Working Parents Jul 22, 2025 10:15:00 AM 529s can help your employees maximize money put aside for education Offering a better benefits package starts with a simple idea: your employees have diverse and ever-changing needs: Retirement may be their end goal, but there may be more pressing needs. Some of your staff might be striving to pay off their student loans. Others may need help saving for education. With Betterment at Work, it’s possible to help them with all three goals in one place. Let's take a closer look at 529 plans, an appealing benefit for working parents that helps them maximize money set aside for educational expenses. 529s help combat the steep cost of college The average cost of 4-year college tuition and fees has more than tripled since 1980. So it’s no wonder paying for kids’ education is a top concern among parents. 529s are special investing accounts that can help, and they’re growing in popularity. The number of 529s opened has increased by 55% since 2009. Funds in a 529 both grow and can be used tax-free for qualified expenses—things like tuition and fees, books and supplies, and even some room and board. You can even use them for up to $10,000 per year in K-12 tuition in all but a few states. Other benefits include a high balance limit—between $235,000 and $550,000 depending on the state—and low-maintenance investment options that automatically adjust risk as the beneficiary nears college age. Betterment at Work streamlines the 529 experience By offering your employees access to 529s through Betterment at Work, you add a unique benefit without adding another benefits provider. Manage your 529 offering right alongside your 401(k) and you can even offer an employer match, just like a 401(k). Just as importantly, your employees get a simple way to sign up for this savings tool. 529s can be a pain to shop for on your own, with nearly every state offering a plan open to anyone. The quality of those plans—everything from investment options and fees to website interfaces—can vary widely. Betterment at Work simplifies things. Employees can compare and select plans all within the Betterment app, and with integrated plans, they can automatically fund their 529 through payroll deductions. They can also see their 529 savings right alongside their 401(k) and connected student loans. 529s are available through our Pro and Flagship plans. Learn more or get started today.

Is it time to unplug from your PEO? May 22, 2025 11:01:55 AM Thinking about leaving your PEO’s 401(k)? Learn when to opt out, how to switch, and why a standalone plan may better fit your growing business. Overseeing employee benefits can be a lot to manage—especially with a business to run. That’s why many growing businesses outsource to a Professional Employer Organization (PEO) — streamlined benefits, simplified payroll, and less administrative overhead. But as your business grows, so do your needs—and what once felt like flexibility might now feel more like a constraint. If your benefits options feel limited, costs are hard to decipher, or you’re craving more control over your retirement plan and broader HR strategy, you might be ready to explore other options for your business. Below, we’ll dig into how PEOs work—and why you don’t have to sacrifice flexibility when it comes to your company’s retirement plan. What is a PEO? A PEO is a third-party organization that enters into a co-employment relationship with your business, in which the PEO will: administer payroll and taxes offer benefits like health insurance, 401(k) plans, and more manage HR compliance and risk mitigation For small and medium-sized businesses, this can be a game-changer—helping employers provide benefits without having to build out a full HR team, which takes time and money. How does a PEO 401(k) work? In general, PEOs offer access to a Multiple Employer Plan (MEP) or a Pooled Employer Plan (PEP). These structures group multiple businesses into a single retirement plan. By joining forces, small businesses may be able to access better pricing—and outsource plan administration. However, MEPs and PEPs may involve certain trade-offs—such as a limited investment menu, plan design restrictions, and less transparency into fees—since decisions are made at the pooled level. Employers who oversee their own 401(k) plan retain full control over investment selection, plan features, service providers, and participant support—allowing for a more tailored and strategic approach. If you’d like to learn more MEPs and PEPs, check out our in-depth guide. Can you pick your own 401(k) provider if you’re using a PEO? In short: yes. While PEOs often offer a default retirement plan, you can choose to set up and sponsor your own 401(k)—even if you continue using the PEO for other services like payroll, benefits, and HR support. This is called an “opt-out 401(k)" or a "standalone 401(k)." You’re still using the PEO for everything else, but your retirement plan stands on its own. Keep in mind that as a 401(k) plan sponsor, you would take on additional responsibilities, such as overseeing plan compliance and filing Form 5500. However, many modern 401(k) providers can handle much of the heavy lifting for you. Why businesses choose to go independent Companies often choose to set up their own 401(k) outside of a PEO for a few key reasons: More flexibility. You can design a plan tailored to your employees’ needs, with features like Roth contributions, automatic enrollment, or customized vesting schedules. Greater investment choice. You often have more options—and lower-cost options— when it comes to the fund lineup. Better fee transparency. Standalone plans typically provide clearer visibility into fees and plan costs. Greater employee engagement. Modern providers tend to offer more intuitive, digital experiences, better education tools, and more personalized retirement advice for employees. Ultimately, it’s about choosing a 401(k) that’s truly aligned with your team—and your business goals. Thinking about opting out of your PEO’s 401(k)? If you’re currently with a PEO but wondering if your retirement plan could be doing more for your employees, it may be time to explore a new 401(k) option. The good news: transitioning doesn’t have to be complicated—with the right support. Betterment at Work can help you design a flexible, easy-to-manage 401(k) plan that’s tailored to your business.