Betterment Now Offers SEP IRAs!

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Betterment now offers SEP IRAs! Read my Betterment review to see how you can qualify to get up to 1 year commission free for opening a new SEP IRA account.

If you’ve been a long-time reader of Frugal Rules, you know I’m a big fan of Betterment. Betterment is a robo-advisor that aims to provide investors access to virtual financial advisory tools. As most financial advisors require a certain amount of investible assets, this creates a barrier to those wanting or needing assistance with investing. In short, they lower the barrier to entry for those wanting help with their investing.

Betterment has taken another major step forward by announcing several weeks ago that they’re now offering SEP IRAs! They had previously been offering plenty of account options, but were lacking in this area.

Why Are SEP IRAs so important?


If you’ve never heard of a SEP IRA – or Simple Employee Pension Individual Retirement Account, they’re a key part to retirement planning for self-employed individuals. As a self-employed individual you automatically give up access to anything like a Pension or 401(k) match. That, my friends, is losing out on free money. This is also not to mention the fact that many who are self-employed are often too busy to make saving for retirement a priority. Personally speaking, we have the ability to save more in running our own business, though it still sucks to lose out on free money.

That being said, a SEP IRA allows you to contribute up to 25 percent of your compensation or $53,000 (for 2015) towards retirement. It doesn’t take long to see why this can be a big win for those who run their own businesses. It’s also important to remember that just because you don’t have a brick and mortar “traditional” business doesn’t mean you can’t have a SEP IRA. If you fall into one of the following categories you can open a SEP IRA and start throwing money into it:

  • Small-business owners
  • Freelancers
  • Independent contractors
  • Consultants
  • Sole proprietors with no employees

If you look at the above list, the range is pretty broad allowing even those with a side hustle or two the capability of opening a SEP IRA and putting away a significant amount of money. That money acts just like money you would contribute to a Traditional IRA allowing you to take the tax deduction the year of the contribution. And, yes, you can contribute to both a SEP IRA and a 401(k) through your employer!

Betterment Makes it Easy to Get Started Investing


Having worked in the online brokerage industry myself I know investors get frustrated by filling out a lot of paperwork to get started. That is not the case with Betterment. In fact, even with the extra work of filling out the required Form 5305-SEP you can be up and running with a personalized portfolio in about five minutes. As a disclaimer, I’ve not tried and tested this myself, but Betterment claims it should only take five minutes to fill out their standard questionnaire.

You can check out my Betterment review to get a full sense of what they have to offer, but below are some of the things that set them apart:

No minimum balance requirement. This is great to see and sets them apart from Wealthfront who requires a modest $500 balance. This gets rid of the excuse that you can’t afford to invest. If you’re starting with several hundred dollars, or less, you can get started with that.

Smart diversification. The questions Betterment asks try to get an idea of what kind of appetite you have for risk. Following the Modern Portfolio Theory, they aim to help you stay with the market and take a long-term view of investing.

New RetireGuide™ feature. This is another new feature added by Betterment. This feature allows you to look at all your investment accounts, income, potential Social Security draw, etc. to help you formulate a strategy for how much you should be saving each year for retirement.

Straightforward fees. I love this about Betterment. They do not have any hidden or maintenance fees. Rather, it’s simple, low-cost and based on the amount of funds you have under management. I’m not a fan of tiered fees, though if you start investing with $5,000 you’d only be paying $17.50 per year for investing. That’s pretty difficult to beat.

They handle everything for you. This is a great feature for those new to investing or those who’re simply too busy. Betterment handles rebalancing and dividend reinvestment, among other things to make it as simple as possible for you.

Tax Loss Harvesting. This feature is not unique to Betterment, as other robo-advisors offer it, but it’s a great way to give a little extra push to your investing. Through Tax Loss Harvesting, Betterment claims to be able to add up to an additional two percent to your portfolio return each year. What’s even better is this is available to accounts of all size.




New Promotion With the Betterment SEP IRA


I believe the introduction of the SEP IRA option makes Betterment an even more compelling option to look at when considering your investment needs. With the rollout of the new account option, Betterment has upped their promotion game for opening a new SEP IRA.

Betterment now offers SEP IRAs! Read my Betterment review to see how you can qualify to get up to 1 year commission free for opening a new SEP IRA account.

Their prior promotion was already relatively nice, though the ones below are even better:

  • Deposit $25,000 = 4 months commission free
  • Deposit $100,000 = 6 months commission free
  • Deposit $500,000 = 12 months commission free


Open a free SEP IRA account with Betterment


How do you find time to invest if you’re self-employed? What’s your biggest challenge as a business owner in saving money for retirement?

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I'm the founder of Frugal Rules, a Dad, husband and veteran of the financial services industry. I'm passionate about helping people learn from my mistakes so that they can enjoy the freedom that comes from living frugally. I'm also a freelance writer, and regularly contribute to GoBankingRates, Investopedia, Lending Tree and more.

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