We’ll walk you through how to withdraw from a taxable account or an IRA. You can withdraw your money from Betterment at any time, without additional fees.
We do not charge any trading fees or assess penalties for requested withdrawals or account closures. It’s your money, and is always accessible to you.
From a web browser, after logging in to your account, go to "Transfer or Rollover" > "Withdraw."
Withdrawals generally take about 4-5 business days to process; funds will automatically be sold and sent to your linked bank account.
When you request a withdrawal, shares in your account are sold and this may have tax consequences. Betterment will always sell your shares in a way that minimizes taxes for you. We’ll sell shares that have lost value first (short-term losses, then long-term losses), and then we’ll sell shares that have gained value (long-term gains, then short-term gains).
Full withdrawal terms and conditions are listed on page 21, section 20 of the Betterment Client Agreement.
Note that the process for withdrawing from your Betterment For Business 401(k) is different. Learn more about withdrawing from your 401(k).
Why 4-5 business days?
When you withdraw from an investment account, the securities you hold must be sold before the cash can be sent to your bank. Betterment processes each request as quickly as possible, subject to market settlement and bank processing timelines. Between trade settlement and ACH processing, this typically means that most customers receive their requested funds in 4-5 business days.
Are there any withdrawal fees or penalties?
There are no transaction fees, account closure fees, or limits to withdraw. If you withdraw 100% of your money invested with Betterment before the end of a calendar quarter, we'll only assess a prorated fee for the total days your money was managed by Betterment. We do not charge fees for accounts with a $0 balance.
Selling shares may have tax consequences. Betterment sells your shares in a way that attempts to minimize taxes for you, using our TaxMin algorithm. We’ll sell shares that have lost value first (short-term losses, then long-term losses), and then we’ll sell shares that have gained value (long-term gains, then short-term gains).
Tax Impact Preview allows you to see an estimate of the taxes you may owe before you make a withdrawal.
Can I set up an automatic withdrawal?
Currently, you can only set up automatic withdrawals from Betterment goals that have corresponding retirement income advice. If you have a Retirement Income goal, you can set up and customize automatic withdrawals to your own schedule, including frequency and day of the month or week. You can make changes, or stop and start the payments, from within your account. You can also continue to take withdrawals manually and your dynamic withdrawal advice will adjust accordingly.
Anything else to be aware of when withdrawing?
- Any external bank account you link for the purpose of transferring funds to or from Betterment must be held in your name.
- We may request additional ownership verification of external bank accounts over email. We take this precaution with your account security in mind.
- For your security, all emails sent from our team will come from an "@betterment.com" address and any requests for documentation will provide a secure link for uploading those documents.
- We strongly recommend that you never upload personally identifiable information or documents as regular email attachments.
- Betterment does not support outbound wire transfers to your bank account nor do we issue checks made out to you personally.
- The dollar value reflected in your withdrawal request may fluctuate due to market volatility until the trades are executed.
- Withdrawals cannot be cancelled once security sales have been executed (for Investing accounts) or cash has been withdrawn from program banks (for Cash Reserve).
Are there limits or fees for transactions with Betterment?
There are no transaction fees with Betterment. That said, there are a few parameters regarding transactions to be aware of:
- The minimum amount you can deposit is $10.
- The maximum amount you can deposit is $300,000 every two business days.
- You can always wire funds into Betterment of any amount, but your bank may charge wire fees.
- You must wait 60 days to withdraw from an IRA Rollover deposit.
- You can only make one allocation change per business day, as we are not a licensed day-trading platform.
How does Tax Impact Preview work?
Selling shares is a taxable event—those sales could be triggered by a withdrawal or an allocation change. Tax Impact Preview shows the estimated gains and losses the sale is expected to realize, as well as an estimate of the taxes that may result, in real-time, before the transaction is carried out.
When initiating a withdrawal amount on the Transfer tab or adjusting the allocation slider on the Advice tab, the estimated tax impact will appear, giving you access to a summary of the short- and long-term gains and losses expected to result from the sales.
Tax Impact Preview generates this estimate by “pre-playing” the transaction to simulate the trades that will take place across all of the ETFs that you hold.
To determine those trades, our algorithms first check whether each asset class is over or underweight by comparing your current allocation to your target allocation. The amount of bonds and stocks to sell is determined in a way that brings each asset class back to the portfolio’s target allocation.
Once the specific ETFs and amounts to sell have been determined, Betterment’s algorithms use the TaxMin accounting method to select the specific lots that will be sold. For each ETF, TaxMin selects losses first and short-term capital gains last in order to minimize the tax impacts.
Tax Impact Preview sums up all the losses and gains that are expected to be realized across the different ETFs and tax lots. If your losses outweigh your gains, Tax Impact Preview will estimate your realized losses. If your gains outweigh your losses, estimated taxes owed will be displayed.
The estimated tax is an upper bound, meaning it assumes the highest applicable tax rates of combined federal, state, and medicare surtax. Actual taxes are likely to be different depending on specific circumstances, including, but not limited to, the marginal tax rate applicable to you, any subsequent trading activity, the presence of other capital gains or losses for the year, and securities prices at the moment your execute the trades.
Tax Impact Preview is just an estimate, since it depends on the current prices of each ETF, which won’t necessarily be the price at the time you trade. However, it will give you a good idea of the impact of the transaction. Tax Impact Preview is not tax advice.
Related Articles