We’re excited that you have chosen to help your employees prioritize your financial wellness with us, starting with your 401(k) plan. Betterment’s easy-to-use platform is designed to help you feel confident in administering your plan. Let’s get started.
TABLE OF CONTENTS
- Welcome letter from Jon Stein
- Administration and compliance
- Employee experience
- Overseeing your plan (including our 401(k) glossary)
- Plan Sponsor dashboard overview
- Adding new participants (individually and in bulk)
- Updating employee information
- Remitting contributions to Betterment
- Updating employee contribution (deferral) rate changes
- Distribution and loan requests
- Important documents
Welcome letter from Jon Stein
Whether you are starting a 401(k) plan for the first time or moving an existing 401(k) plan to Betterment, we applaud your commitment to helping employees save for their future. We look forward to working with you and your team to help your plan be a meaningful component of your overall benefit offering.
At Betterment, our mission is simple: to empower people to do what’s best for their money so they can live better. Our retail investing platform was founded as an alternative to the traditional approach where people had to either manage their own investments or pay costly fees for financial advisors and sophisticated investment strategies. We believed investing—and fiduciary advice—should be more accessible and more affordable.
That same philosophy extends to our 401(k). Our easy-to-use platform ensures that employees can get personalized advice on all their financial goals—in one place. And our comprehensive administrative and compliance support means that you can spend your time running your business—not having to run your plan.
Thank you for entrusting Betterment with your 401(k) plan, and we look forward to getting started!
By sponsoring a 401(k) plan, you take on important fiduciary responsibilities for the plan, including acting in the best interests of plan participants at all times, following the plan document as written, paying only reasonable fees, depositing contributions in a timely manner and meeting all reporting and disclosure requirements.
While you can never fully transfer or eliminate all fiduciary responsibility, Betterment will help with many of these duties. In fact, at no extra cost to you or your employees, Betterment assumes certain fiduciary functions to reduce your liability, serving as both a 3(16) administrative fiduciary and a 3(38) investment fiduciary.
Let’s review key areas of your plan and the support that Betterment provides. As always, we provide support via phone and email to both you and your employees.
Administration and compliance
Our innovative technology and dedicated support make it easy for you to keep your plan running smoothly and remain fully compliant at all times.
- As your 3(16) fiduciary, we perform a wide range of administrative duties including preparing and filing your Form 5500
- As your 3(38) investment manager with full discretion, we will select and monitor plan investments
- We provide on-going consultative support with respect to plan design, compliance testing and annual audits
Betterment uses low-cost ETFs to create globally diversified portfolios across 12 asset classes that are designed to help maximize returns for each level of risk. Employees will be defaulted into a portfolio that corresponds to their years to retirement, but they choose alternative investment strategies if they wish:
- Flexible Portfolio — using funds in Betterment Core Portfolio Strategy, employees can customize their portfolio by adjusting fund weights
- Socially Responsible Portfolio — for socially-conscious employees who want their investments to reflect their personal values
- Goldman Sachs Smart Beta Portfolio — for employees who are willing to take on additional risks in the pursuit of higher returns
- BlackRock Target Income Portfolio — for retirees (or employees with non-retirement goals), this approach seeks to provide a steady stream of cash income
In addition, our investment approach incorporates sophisticated strategies such as automatic rebalancing, tax coordination, and automatic allocation adjustments as someone gets older. And with personalized advice and an integrated platform, employees can earn better returns at various levels of risk.
Betterment’s clean design and straightforward tools help your employees get more out of their retirement plan.
- Our goals-based approach helps employees see all of their financial goals in one place.
- We help employees establish a Personal Retirement Plan based on their unique situation and preferences. Every time they log in, they can easily see whether they are off-track and take immediate corrective action.
- We make it easy for employees to sync other accounts so that our advice will propose a total solution that takes everything into consideration.
Employees have access to numerous educational resources including:
- Comprehensive guide to your Betterment 401(k)
- Webinars and videos
- Website resources
In addition, feel free to share the following to promote plan engagement and in response to specific employee questions:
- Employee guides
Overseeing your plan
In addition to the fiduciary responsibilities mentioned above, plan oversight includes making sure you and those responsible for the plan’s operations are familiar with the plan document. Depending on the size of your organization, it may be appropriate to establish a 401(k) committee that meets periodically to review the plan. Decisions should be fully vetted and documented.
On an on-going basis, you and members of your team will also be responsible for:
- Adding newly eligible employees to the plan
- Ensuring that Betterment has current and accurate employee information
- Review and approval of distributions (and loans, if offered by the plan)
- Sending contributions and contribution rate changes to Betterment (non-integrated plans only
- Monitoring any vendors you hire
Betterment contact information:
Plan sponsor dashboard overview
The plan sponsor dashboard is the home for your 401(k) plan, where you can perform all administrative functions and find all plan information.
To get started, visit the plan sponsor login page, which is not to be confused with the login page to your personal Betterment account. (Although you may have the same login credentials for both pages, they are two different websites with different login specifications.)
The plan sponsor dashboard allows for three levels of access:
- Administrator access provides full access to the dashboard and allows all actions to be performed.
- Staff access provides the same access as an administrator but does not allow plan managers to be added or deleted.
- View only access does not allow items on the dashboard to be edited.
In order to gain access to the plan sponsor dashboard, you must either be invited by a member of your Betterment Plan Support Team or a current plan manager who has Administrator access (via Settings>Manage access).
The plan sponsor dashboard contains several tabs that you should familiarize yourself with. We will be referencing these tabs throughout this document.
- Home — shows you high-level statistics and summary information about your plan, along with notifications that may require your attention and and recent plan activity
- Employees — lists all active and inactive employees in your plan, along with information that requires your review
- Payroll — location to upload payroll. Also includes notifications and past payroll activity
- Plan — in addition to plan statistics, this is where you will go to approve loan and distribution requests. You will also be able to view recent activity as well as upcoming compliance deadlines
- Resources – source for reports, documents and education information to support you in your role as plan administrator. Under the Documents tab, you will find templates you may need for various uploads; and under the Support tab, you will find FAQs.
Special note for first-time plans
As a new plan, there are two small but important items to set up your 401(k) plan correctly and avoid complications down the road:
- Ensure payroll system and Betterment match
Before your payroll launch date, make sure that your payroll system is set up to correctly withhold employee contributions. Your Betterment 401(k) offers Traditional and Roth contributions. Typically, these are two separate deduction codes within payroll systems. Make sure that your employee contribution elections from Betterment match your payroll system. You will receive notifications in your plan sponsor dashboard of changes and you can also run a custom report.
- Definition of compensation
Our plan documents usually define compensation as all earned income (think Box 5 of the W2). That means all income reported on the W2 must be included in the calculation of deductions within the payroll system. You want to ensure that your payroll system includes commission and bonus checks as compensation for purposes of 401(k) deductions.
- Loan Code
If your plan offers loans, you will need to set up a loan deduction code in your payroll system so that the loan repayment amount will be deducted from the participant’s paycheck on the first repayment date.
Adding new participants (individually and in bulk)
If your plan is integrated with one of our preferred payroll providers, new participants are added automatically when created in the payroll system, so this operation does not apply to you.
When an employee becomes eligible for the plan, they must be added to the Betterment system. You can add each employee individually through the plan sponsor dashboard using these steps (our bulk upload process is outlined further down):
- To add a new participant, login to the plan sponsor dashboard.
- Once in the dashboard, click on the Employees tab, then click on the blue Add Employee button
- Follow the prompts on each page to successfully add a new employee. You will receive an error message if any data is incomplete or appears incorrect.
Uploading multiple employees at once
To make it easier and save time, you may want to take advantage of our bulk employee upload process which is detailed in this in-depth tutorial.
We have built in a 15-minute buffer between the time you submit employee information to us and the time an employee sees a Betterment 401(k) welcome email. This allows you to correct any mistakes that you might realize right after you hit submit!
Clients often ask: What are some common errors when adding a new employee?
Answer: Two common errors we see during the “add a new employee” process include:
- Mismatched information to existing Betterment customer record
If someone has previously had a Betterment account before joining your organization, all of the personal information must match the information we have on file. Differences may occur if, for example, the employee may have had a different last name when they signed up for Betterment years ago or their current profile includes a typo. The error “Last name matches existing user” indicates that the employee’s Betterment profile has a different last name.
- Failed ID check
As part of SEC regulations and the US Patriot Act, Betterment must attempt to verify the identity of all our clients. Our system automatically checks new employee information you enter against a database of publicly-available information. Participants who fail the ID check will be alerted via email and should follow the prompts in the email to resolve the issue. It is not uncommon for newly married, recently-relocated or younger participants to fail the ID checks, which is not a cause for concern.
Updating employee information
It is important that all employee information be kept current on the Betterment system.
If your plan is integrated with one of our preferred payroll providers, please make sure all demographic data is correct in your payroll system, as that is the main source of truth and all demographic data on the Betterment system will be overwritten when the next sync with your plan occurs.
For plans that do not have payroll integration:
- Participants can update every piece of personal information themselves within their profile under Settings.
- Plan administrators can update most employee information, with the exception of the email address linked to a participant account which serves as a login ID.
If an email address was changed without an employee’s knowledge, they will be locked out of their account. Please contact the Betterment Plan Support Team for help in changing an email address or direct the employee to make the change themselves.
Remitting contributions to Betterment
If your plan is integrated with one of our preferred payroll partners, the process to remit contributions to your 401(k) plan couldn’t be easier. All you have to do is ensure the contribution data is accurate and run your payroll as you normally would!
Once you run your payroll in your system:
- the contribution data will be automatically sent to Betterment for processing
- Betterment will send an ACH request to your bank account on file
- Upon receipt, Betterment will allocate the funds to the proper accounts and execute any necessary trades.
For plans without integrated payroll, data must be uploaded via the Payroll Upload template accessible via the Payroll Upload page of the Plan Sponsor Dashboard. The pre-formatted template includes all of your employees who have an account in your 401(k) plan and can be populated with a report available on most payroll systems. Information required:
- compensation for the pay period
- hours worked for the pay period
- contribution amounts
- any applicable employer match amounts
- any applicable loan repayment amounts
Once you have the file ready for upload:
- Login to the Plan Sponsor Dashboard and navigate to the Payroll Upload Page
- Click Upload Payroll
- NOTE: You will always get an email confirmation for the payroll upload. If you do not receive that email, your payroll submission was not completed.
- Upon receipt, Betterment will check for any issues and will send you an email with a summary of the contribution file, along with the amount to be withdrawn from your organization’s bank account.
- Once you approve the submission, we will send an ACH request to your bank account on file and upon receipt, allocate the funds to the proper accounts and execute any necessary trades.
Updating employee contribution (deferral) rate changes
If your plan is integrated with one of our preferred payroll providers, Betterment pushes all contribution rate changes directly to your payroll provider, meaning there is nothing for you to do!
For plans that do not have payroll integration, some work is needed to make sure contribution rates are correctly passed to Betterment as recordkeeper and to ensure a clean audit trail. There are three ways for you to see contribution rate changes made by employees:
- View all recent changes by logging into the plan sponsor dashboard and clicking on Payroll>Notifications.
- View the Weekly Deferral Rate Change email sent by Betterment, which links directly to the reports found on the dashboard.
- Run a Current Deferral Rate report by logging into the plan sponsor dashboard and navigating to Documents>Reports>Run a Report>Current Deferral Rates.
Regardless of which method you use, if any employees have made contribution rate changes, you will need to reflect those changes in your payroll system before you run your next payroll.
Clients often ask: Are there regulatory requirements around how quickly I need to make contribution rate changes once I am alerted?
Answer: The requirement is “as soon as administratively feasible,” which usually means within 1 to 2 pay periods. It’s very possible for you to miss a contribution rate change that an employee makes shortly before you run payroll. As long as you update your payroll system next time, you are fine.
Distribution and loan requests
As plan administrator, you are responsible for approving all loans and distributions since assets are leaving the plan.
When a participant seeks a distribution online, our system will dynamically present them with available options at that moment in time (based on plan rules and the individual eligibility), with brief explanations regarding the pros and cons of taking a distribution.
Once the participant submits a request, you will be alerted via email that a distribution request is pending. You can view any pending distribution request in the dashboard under Plan>Distribution Requests. We suggest you check the distribution request for:
- Common or obvious spelling mistakes
- Accuracy of vesting
- Accuracy of matching contribution amounts if your plan provides a match
Please note: Mistakes are easier to fix before the request is approved.
For the participant, the online loan request flow works similarly as for distributions. Once you receive an email that a loan request is pending, you will need to do the following:
- Approve the loan
- Add the loan repayment to your payroll system (regardless of whether your payroll is integrated).
You can find a variety of reports within the Plan Sponsor Dashboard to help you analyze, manage, monitor, and evaluate your plan.
To run a report, simply go to Resources>Reports> Run a Report.
Many of the important documents related to your plan can be found within Resources>Documents, including participant notices and disclosures (participants may also find this information within their account via disclosures. These disclosures can be found in the plan sponsor dashboard via Documents>401(k) Documents.