Betterment to Offer Mega-Backdoor Roth Conversions to Solo 401(k)s
The platform will provide associated tax forms and track contributions against annual limits.
Betterment LLC, an investment advisory firm, announced it is introducing mega-backdoor Roth capabilities for solo 401(k) plans. The new features are available to self-employed customers using Betterment and financial advisers offering solo 401(k)s to clients through Betterment Advisor Solutions.
Through mega backdoor Roth, eligible 401(k) plan participants can currently contribute up to $72,000 annually through employee contributions, employer matches and voluntary after-tax contributions.
“The next generation of workers is redefining what a career looks like, and retirement savings options need to evolve alongside them,” said Sarah Levy, CEO of Betterment, in a statement. “By bringing mega backdoor Roth capabilities to our solo 401(k), we’re making it easier for self-employed investors to make the most of available contribution limits and build more tax-advantaged savings.”
Eligible customers can start the Roth conversion within their Betterment account and receive associated tax forms through the platform. Advisers using Betterment can use automated tools to track contributions against annual limits. Contributions, conversions and 1099-R reporting are supported within the platform. Betterment plans to introduce mega backdoor Roth capabilities for its employer-sponsored 401(k) plans in the coming months.
Betterment has more than 1 million customers and manages more than $70 billion in assets. It added artificial-intelligence-powered benchmarking to its 401(k) platform in March and launched its solo 401(k) platform in April.