Betterment Roth IRA Review: Best Retirement Option?

In a nutshell: The Betterment Roth IRA makes retirement simple. With no trading fees and no commissions to pay, making the most of your Roth IRA allowance is simple. Our full Betterment review loves this platform and its Roth IRA performs extremely well too.

Pros and Cons

Pros

  • No trading fees
  • Dividend reinvestment
  • Fractional share trading

Cons

  • No self-directed option
  • Only stocks and bonds

Betterment Roth IRA Review Introduction

Invest with Betterment and you’ll immediately notice their emphasis on retirement accounts. The Roth IRA is not the only option available, but it’s one of the best.


You pay taxes on your income before you invest, but in exchange, there are no taxes to pay on withdrawals you make from your Roth IRA.


Betterment offers a selection of cool features, which we will discuss later in this review on the Betterment Roth IRA.


Ultimately, Betterment is part of the next generation of intelligent robo-advisors. They are making retirement investing simple. No prior experience is necessary to invest in a Betterment Roth IRA.

What is a Betterment Roth IRA?

Betterment was originally launched in 2008. As one of the oldest robo-advisors, they hold a huge share of the market, with $22 billion in assets under management.


The platform’s approach to automated investing means that this is a product aimed at beginners. Let Betterment handle your retirement for you.


All Roth IRA accounts are based around ETFs holding various stocks and bonds.

Under the current annual contribution limits, you can only contribute $6,000 into your Betterment Roth IRA if you’re under 50, or $7,000 if you’re over 50.


Keep reading to find out more about the features of a Betterment Roth IRA.

Betterment Roth IRA Features

Betterment offers several important features to not only enable your retirement savings to grow but to protect your money against the fluctuations of the market.


Here are the main features that make a Betterment retirement account so attractive.


Fully Automated Investing


As a renowned robo-advisor, Betterment specializes in automated investing. All you have to do is choose your preferred portfolio design and Betterment will do the rest.


They have plenty of different portfolios to align with your goals, including a dedicated socially responsible investment portfolio.


The downside is you have limited portfolio customization and limited asset classes to choose from. For example, there’s no access to REIT investments.


Automated Portfolio Rebalancing


Protecting your retirement funds is key to any successful Roth IRA. Betterment takes the hassle out of your hands with automated portfolio rebalancing.


Based on the various machinations of the market over time, Betterment will automatically rebalance your portfolio on your behalf to ensure that your target allocations are met.


You can have full peace of mind that your Roth IRA portfolio isn’t going to drift.


Roth IRA Dividend Reinvestment


Regular dividends paid based on your stock holdings are the foundation of growing your retirement savings.


With a Betterment Roth IRA, you can ensure that your dividends are automatically reinvested. This ensures that every dollar continues to work for you without your input.

Betterment Roth IRA Fees

As you would expect from any robo-advisor, there are no trading fees and no commissions to pay when you open a Betterment Roth IRA.


On the other hand, the platform does levy a 0.25% asset management fee. While this is unfortunate, it’s still lower than many other Roth IRA providers.


Finally, depending on your stock/bond mix, ETF expense ratios range from 0.07% to 0.15%.


As we say in our full Betterment review, its fees are still lower than traditional brokerages.

Betterment Roth IRA FAQs

Looking to create an account with Betterment? Here are the answers to some of the most common questions.


Can I customize my portfolio?


Customization is limited. Betterment Roth IRAs are fully automated and there’s no option to actively invest. More experienced investors may want to look elsewhere.


Is my Betterment Roth IRA protected?


Yes, your Roth IRA is FDIC-insured. This means cash up to $250,000 will be covered in the event Betterment collapses.


Does Betterment Offer Tax Coordination?


Yes, Betterment will automatically transfer any assets in your standard investment account into your Roth IRA if they are likely to attract a higher rate of tax.

This can grow your portfolio by up to 30% over time.

Betterment Roth IRA: Is it Right for You?

If you’re starting to save for retirement for the first time, a Betterment Roth IRA is an ideal choice.


Like in our full review on Betterment, we love the fact they this is a truly hands-off approach to retirement planning.


Automated portfolios, dividend reinvestment, and rebalancing are just some of the cool features that can allow you to plan for your twilight years with peace of mind.


Follow the Modest Money link to open your Betterment Roth IRA and enjoy your first year fee-free now.



Bob Haegele

About the Author:

Bob Haegele is a personal finance writer, entrepreneur, and dog walker. He's a money management expert and investing connoisseur. Bob has been writing about personal finance for three years and now manages several personal finance sites, including The Frugal Fellow and Modest Money. You can also find him contributing to popular websites such as GOBankingRates, Bankrate, and Insurance.com. You can see more of his work on Muck Rack and Contently, or connect with him on LinkedIn.

Leave a Comment

Your email address will not be published. Required fields are marked *