Rolling Over a 401k or IRA to a Betterment IRA

If you are thinking about rolling over your old 401k to a Betterment IRA to take advantage of their low investment fees the process is pretty simple. They use the direct rollover method to transfer the old 401k to the IRA. For a 401k the first thing you need to do is create an IRA at Betterment if you do not already have an IRA at Betterment.  After you have created your IRA you just need to click on the “Rollover money from an IRA/401k” tab under the gear button on the IRA summary page. Once you click on that you will be prompted to answer a couple of questions and then you will be sent an email with further personalized instructions.

If you want to rollover an existing IRA into your Betterment IRA the process is different, but still pretty simple.  For IRA rollovers, Betterment uses the indirect rollover process rather than the direct rollover process they use for the 401k.  The first thing you need to do is ask your current IRA provider for an early distribution with no withholding.  That way no tax will be withheld from the distribution.  The next thing you need to do is deposit the money from the early distribution in your Betterment IRA within 60 days in order to avoid tax penalties.  To do that you log in, go to the transfer tab, and select “IRA rollover” as the contribution type.  Note that a traditional IRA can only be transferred to a traditional IRA and a Roth IRA can only be transferred to a Roth IRA.  If you have used the indirect rollover process in the previous 12 months you may not be able to use it again to make the transfer to Betterment.  There are a few other special situations to be aware of that you can read about at Betterment before transferring your IRA.

If you would like to open an account with Betterment, be it an IRA account or just a normal investment account, please consider using my referral link.  You will get a $25 bonus for using my link and I’ll get $10 to boot. That is a win-win. Let me know in the comments if you have any questions about Betterment.

Betterment Referral Link