529 Education Savings Disclosure

You should read this disclosure carefully and consider your personal financial circumstances before deciding whether to use Betterment’s 529 education savings services. 

Betterment’s 529 education savings services offer you the ability to enroll in certain state-sponsored 529 plans (“Participating Plans”) serviced by Ascensus College Savings Recordkeeping Services, LLC (“Ascensus”) directly through the Betterment platform and to integrate certain account functionality (an “Integrated 529 Account”). In the event you wish to enroll in a 529 plan that is not eligible to be integrated with Betterment (a “Non-Participating Plan”), you may do so directly through the plan’s website and then connect the account to your Betterment dashboard manually or via Plaid (a “Non-Integrated 529 Account”). 

Unlike other Betterment accounts, 529 accounts are not custodied or managed by Betterment. While Betterment helps to facilitate your enrollment in Participating Plans and, in the case of Integrated 529 Accounts, allows you to make contributions through the Betterment interface, Betterment has no role in selecting, monitoring, or otherwise managing the investments in your 529 account. 

I. Plan Selection

Selecting the right 529 plan for you depends on a variety of factors. Betterment does not consider such factors in determining which plans to display through the enrollment flow and instead considers only your current state of residence and its corresponding tax treatment. To the extent Betterment displays an alternative to your in-state plan, such alternative plan is a default and does not vary depending on the information you provide. 

In displaying available 529 plans, Betterment shows the fee associated with a default portfolio identified by Betterment. Most plans offer a variety of portfolios and investment options. If you select a portfolio other than the default, your fees will likely be different. 

Betterment relies on third parties to provide certain plan and portfolio information, including information regarding portfolio fees. While Betterment endeavors to keep its data current, it is possible that the fees displayed in our interface will be out of date. Additionally, the fee information displayed may be rounded. Accordingly, you should always consult the program description and other plan-issued materials for the most precise and up-to-date fee information before enrolling and on an ongoing basis after enrollment.

II. Investment Selection

The appropriate portfolio for your 529 account depends on a variety of factors. Betterment is not providing any advice or recommendation regarding your selection of investments, allocation, or any other features of your 529 account. Similarly, Betterment is not responsible for reviewing or managing your investment selections, rebalancing your account, or providing ongoing advice regarding or monitoring of your 529 account.

529 plans offer a variety of different portfolios and investment selections, which may be categorized according to risk level, subject matter, or other factors. Such categories and any corresponding labels are assigned by the 529 plans, and not by Betterment. If Betterment uses any of the same terms, it may define them differently than the 529 plans do. 

III. 529 Account Contributions

Contributions to your Integrated 529 Account initiated through Betterment are subject to a hold period of approximately 3 business days in the case of payroll deductions and 5 business days in the case of transfers from your connected bank account. Contributions typically will be reflected in your Integrated 529 Account balance within 7 business days. If your payroll contribution fails to process for any reason, Betterment will return the funds to your connected bank account.

Payroll contributions to your Integrated 529 Account are after tax. 

 IV. Actions Unavailable via Betterment

If you wish to make changes to your Integrated 529 Account, including altering your investment selection, changing your allocation, or withdrawing funds, or wish to view your monthly 529 account statements, you will need to do so directly through your plan. These actions cannot be taken through the Betterment interface. Additionally, Betterment does not present information about the performance of your 529 investments, so you should consult your plan for information about your investment performance.

 V. Profile Updates

It is your responsibility to ensure that your account details, including but not limited to your contact information and state of residence, are up to date in your Betterment account and in your Integrated 529 Account. Updates to your Betterment account profile (such as changes to your name, address, or other contact information) will not be automatically provided to your 529 plan provider. Similarly, if you make updates to your Integrated 529 Account via the plan website, those updates will not be communicated to Betterment. 

VI. Non-Participating Plans

Accounts with Non-Participating Plans are not eligible to be set up through the Betterment platform. To the extent your employer offers matching contributions to 529 accounts, Betterment does not support this functionality for Non-Participating Plans. Accounts with Non-Participating Plans may be connected to Betterment manually or via Plaid and are subject to the terms described in the Linked External Accounts section of our Goal Projection and Advice Disclosure. 

VII. Limited Scope of Advice

Betterment is providing limited-scope advice regarding which 529 plan you may wish to select, based on your state of residence, any corresponding tax breaks associated with that state, and (where appropriate) Betterment’s identification of an alternative to your in-state plan that offers low-fee portfolios. This advice is dependent on the information you provide us regarding your residency. Moreover, this advice does not take into account your personal financial circumstances or investing goals. Betterment does not monitor changes to your state of residence changes, which may affect your tax benefits.

Betterment is not providing any advice regarding which portfolio or investments to select, what allocation is appropriate, how your investment strategy should change over time, or any other aspect of your 529 account. Betterment is also not providing any ongoing advice or monitoring regarding your 529 account or making recommendations as to how much you should save in order to meet your goals. 

Additionally, Betterment is not providing tax-related advice. It is important to understand any tax considerations relevant to your selection of a 529 plan and portfolio, as well as the tax consequences of any withdrawals you plan to make. You should consider consulting a tax advisor about your particular situation.

VIII. Fees and Conflict of Interest

Betterment does not charge fees in connection with your 529 account. However, Betterment receives compensation in the form of a flat, one-time fee of $9.25 from Ascensus for each new 529 account opened with a Participating Plan via the Betterment platform and funded by the Betterment client within 60 days. This is a conflict of interest in that Betterment receives a financial benefit when clients open and fund a 529 account with certain 529 plans but not others. With that said, Betterment does not take this compensation into account when providing advice regarding education savings. 

Additionally, Betterment has a financial incentive to recommend that Betterment clients invest in securities by setting up an education savings goal with a taxable investing account at Betterment, rather than contributing to a 529 account, which is externally managed, because Betterment charges advisory fees on account balances in the securities accounts that it manages. However, Betterment does not make recommendations as to whether you should invest in a 529 account as opposed to other investing accounts offered by Betterment.

IX. RIA Authorization

In opening or linking an Integrated 529 Account on the Betterment platform, you agree that Betterment will act as an authorized agent and be designated as a registered investment advisor on your 529 account and any other 529 Accounts that you own now or in the future in the same Participating Plan, whether or not you open the 529 account through the Betterment platform or directly on the 529 plan website, and that Betterment may link your 529 accounts with the same Participating Plan to your Betterment account. This means that the Participating Plan can provide Betterment and its employees and agents with information regarding your 529 accounts, including but not limited to the daily balance of the investment options in your 529 accounts and personal information indicated in the 529 accounts. It also means that the 529 plan will act on your instructions, as received through or from Betterment, to take certain actions with respect to your 529 accounts, including but not limited to establishing the 529 account and contributing funds to your selected investment options, and that the Participating Plan may act on these instructions without notifying you in advance. Further, by directing the Participating Plan to designate Betterment as the registered investment advisor, you are directing the plan to replace other registered investment advisor(s) that may currently be associated with your 529 accounts, if any. 

This authorization will remain in effect so long as you are a Betterment client or until you revoke it and Betterment disconnects your 529 account from the Betterment platform. Notwithstanding the foregoing, the Participating Plan may terminate Betterment’s authority at any time at its sole discretion if it decides to withdraw from Betterment’s 529 Education Savings Services. You will be notified in advance of any such termination. You understand and agree that the Participating Plan along with its state administrators and service providers (collectively with their respective affiliates, agents, employees, and any third parties acting on their behalf) are not responsible or liable for any claims or losses as a result of or arising from (i) the plan’s reliance on this authorization, or (ii) Betterment’s breach of its fiduciary duty or violation of applicable law.

X. Changes to the Service

Betterment reserves the right to make changes to its 529 education savings services at any time. Moreover, these services are offered in partnership with your employer as part of our Betterment at Work platform. Either Betterment or your employer may terminate this partnership at any time. In the event of such termination, you will no longer be able to make payroll contributions to your 529 account through the Betterment platform, and employer matching contributions (if any) will be unavailable.