Betterment Roth IRA is a tax-advantaged retirement account to help you save for your future.
Betterment helps you manage your money through cash management, guided investing, and retirement planning. As a fiduciary, the company acts in your best interest to help with your investing and retirement goals.
What is a Betterment IRA?
Betterment Roth IRA is a retirement plan offered to members. With Betterment IRA, your tax-advantaged investments use Modern Portfolio Theory to create an asset allocation mix with lower fees and diversification. It takes into consideration your financial goals and time horizon.
Save for retirement with a Betterment Roth IRA, traditional, or SEP. You can also access retirement planning tools by linking external accounts or transferring your retirement funds from another brokerage or employer plan.
What’s an IRA?
IRA stands for Individual Retirement Arrangement, a tax-advantaged account. When you open a Betterment Roth IRA, the Robo-advisor creates a portfolio mix tailored to your goals.
Why Invest in Roth IRA?
IRAs can help you invest for retirement with potential tax advantages. Tax-advantaged accounts like IRAs are a retirement savings plan where you get tax benefits such as tax exemption or tax-deferral.
- Tax strategy–depending on the IRA, you can save taxes now with a deduction or save later with a tax-free withdrawal. With Roth IRAs, your contributions are from after-tax income.
- Grow your investment account with income from interest, dividends, and capital gains.
- Withdraw contributions anytime with no penalty.
How Betterment IRA Works
Depending on your unique situation and retirement goals, Betterment will suggest the right IRA for your situation and risk tolerance.
Get retirement advice and automated tax-saving strategies like tax-loss harvesting to help you avoid unnecessary taxes and save more for the long term.
With Betterment Roth IRA, you can add to your retirement plan with one-time or recurring contributions up to the IRS limit. For 2020, the IRS contribution limit is $6,000 for most people ($7,000 if 50 or older).
There are 4 Betterment Retirement accounts offered:
- Traditional IRA – tax-deductible account to add to your retirement savings. Earnings can grow tax-deferred until you withdraw the funds in retirement.
- Roth IRA – Take advantage of tax-free earnings and withdrawals with this retirement account. Your contributions are after taxes.
- SEP IRA – a Simplified Employee Pension (SEP) plan provides business owners with a retirement account.
- Roth Conversion – Easily convert money from a traditional IRA into a Roth IRA—right within the app. It offers tax-free growth potential and tax-free withdrawal in retirement.
Features & Benefits
Similar to Betterment’s general investing account, you’ll get the following features:
- Minimum Investment Amount: $0 to open an account.
- Robo-advisor: your IRAs are managed based on your age and goals with a transparent fee.
- Diversified portfolio: a diversified portfolio of exchange-traded funds (ETFs) with six asset classes: large and small companies, emerging markets, government bonds, corporate bonds,
- Automatic Rebalancing: your portfolio is optimized, so your stocks and bonds ratio doesn’t drift from suggested allocation.
- Portfolio options: choose between the core portfolio, Goldman Sachs Smart Beta portfolios, or flexible portfolios that allow you to adjust the asset allocation mix.
In addition, Betterment Roth IRAs takes advantage of the following:
- Automatic Allocation Adjustment: the portfolio allocation adjusts for less risk as you near retirement age.
- Savings Reminders: get helpful nudges so you save as much as you can in your IRA each year.
- Tax Coordination: Helps to lower tax liability through a tax coordinated portfolio feature. Get the most highly taxed assets into a Roth and lower-taxed assets into a standard taxable account.
- Financial Planner: speak with financial advisors in the premium plan to discuss your overall financial goals.
With Betterment IRA, you can transfer and roll over your existing retirement plans and potentially save on management fees.
- Transfer an IRA: transfer your existing brokerage account into a Betterment IRA.
- Roll Over a 401(k): submit a request to roll over your employer-sponsored plan by starting your request with support.
Betterment Roth IRA fees are structured as follows:
Betterment Digital: $0 minimum balance; 0.25% annual management fee of $2.50/year for every $1,000.
Betterment Premium: $100,000 minimum balance; 0.40% annual management fee or $400/year for every $100,000.
There are no fees to use Betterment Checking and Cash Reserve.
It’s essential to understand all IRA accounts are regulated. There are tax implications. Withdrawing money before retirement age can result in taxes, early withdrawal fees, and penalties assessed by the IRS.
Who is it best for?
Betterment Roth IRAs are best for people who don’t want to worry or think about how to invest for their retirement. Using a Robo-advisor can reduce the need to learn what stocks, ETFs, or mutual funds to invest into your portfolio.
Betterment Roth IRA Review
Betterment is a legit company and has been in business for over 11 years. The Betterment app has a 4.8 out of 5-star rating with 31K reviews in the App Store.
In our Betterment Roth IRA review, the Robo-advisor shines with its features and transparency. Similar to its general investing account, newbies and passive investors can benefit from its managed account.
It’s a simple process to get started. If you’re not an existing Betterment user, you can quickly sign up and see your recommended asset allocation, then choose to fund it.
Betterment offers a host of financial tools and retirement calculators. You can learn through their extensive educational resources or access human advisors.
Betterment offers 24/7 customer support via email and chat.
Pros and Cons
- No account minimum balance requirements
- Transparent fees based on your assets under management
- Automatic Rebalancing
- Tax-coordinated portfolio
How to Start a Betterment Roth IRA
The time needed: 2 minutes.
Step-by-step to open a Betterment retirement
- Getting started
Log in to your account or click on the link to register.
- Open an IRA account
Complete the signup process by answering questions like age and annual pre-tax income.
- View portfolio recommendation
- The core portfolio is based on your age.
- Fund account
- Transfer money by linking your bank account.
Betterment Roth IRA Alternatives
What is Betterment?
Betterment is a Robo-advisor using algorithms to recommend an investment portfolio allocation to reach your financial goals. With Betterment, you get a simple, all-in-one retirement investing platform.
As part of its investment strategy, Betterment offers a comprehensive suite of products and tools from financial accounts to taxable accounts, high-yield savings account, college planning, and investment advice.
- Betterment Cash Reserve: no fee cash management account is a high-yield cash account held in partner banks with FDIC insurance.
- Betterment Checking: a checking account with no monthly account fees, maintenance fees, overdraft fees, or withdrawal fees, and all ATM fees worldwide reimbursed, including the Visa 1% foreign transaction fees.
- Betterment Investing: a managed taxable account with tax-loss harvesting, automatic Rebalancing, responsible investing, and a $100 minimum deposit.
- Betterment Premium: a premium plan or financial advice package to get unlimited access to CFP® professional advice on the phone. Improve your financial life with the help of financial advisors who has your best interest in mind.
Does Betterment offer a retirement calculator?
Yes, Betterment calculators are available to register and non-registered users. You can use a Roth and Traditional IRA calculator. With the calculator, you can learn how your investment might grow to meet your retirement planning needs.
What is Betterment’s Customer Service?
Betterment customer service number is 1-718-400-6898. Support is available Monday through Friday, 9:00 am-6:00 pm (ET).
How can I speak with a Betterment financial advisor?
If you need help with educational planning, retirement planning, or marriage planning, you can schedule a call with CFP® professionals. Rates start at $299 for 45 minutes.
Can I move 401(k) to Betterment?
Betterment allows you to roll over your old employer-sponsored retirement plan into a traditional IRA. After doing so, you regain control over your investment strategy along with lower cost and financial advice.