Insider’s experts choose the best products and services to help make smart decisions with your money (here’s how). In some cases, we receive a commission from our our partners, however, our opinions are our own. Terms apply to offers listed on this page.
Betterment vs. Ellevest IRAs: The biggest differences
Compare Betterment IRAs and Ellevest IRAs
Betterment and Ellevest are two popular robo-advisors that let you automate investment accounts. These two platforms typically best suit those who want to build wealth without actively buying and selling stocks or other assets.
And if you’d like to have your IRAs professionally managed, both offer three types of such accounts: traditional IRAs, Roth IRAs, and SEP IRAs. But the associated fees and resources vary for each platform.
Betterment is likely the best option for investors who prioritize tax-reduction strategies and goal-based planning and can survive with or without complimentary one-on-one human advisor guidance. While it offers human advisor access as part of its premium plan, you’ll have to pay for access if you’re enrolled in the digital plan.
Ellevest, on the other hand, is a better choice for those who want access to financial planner guidance and portfolios that factor in things like women’s longer lifespans. Though the platform focuses specifically on female investors and closing the gender gap, it also welcomes all clients.
IRA eligibility requirements
Betterment and Ellevest offer the same types of automated IRAs, but the two mainly differ when it comes to fees and resources. But before you get started, it’s important to note the rules of each account:
- Traditional IRA: Those who are at least 18 years of age with taxable income can set up a traditional IRA. With traditional IRAs, you can contribute up to $6,000 per year (or $7,000 if you’re over the age of 50) in pre-tax dollars. You won’t have to pay taxes until you make withdrawals at age 591/2 .
- Roth IRA: As with traditional IRAs, you’ll need to be at least 18 years of age with taxable income to set up one of these accounts. However, unlike traditional IRAs, you can only make contributions if you meet the income thresholds set by the IRS. Single filers can only contribute the full $6,000 or $7,000 for the 2022 tax year if their modified adjusted gross income (MAGI) is less than $129,000 (the limit for married couples is $204,000).
- SEP IRAs: Both Betterment and Ellevest also allow for automated SEP IRAs. Self-employed individuals and small business owners can set up these accounts, and they allow for contributions of up to $61,000 in 2022.
Use Insider’s calculator to see if you’re on your way to a comfortable retirement by answering a few questions about yourself, your savings, and how long you expect to keep working.
You will have about
You will need about
*Need is based on covering 70% of your annual pre-retirement income and a
expectancy of 100 years.
Are Betterment’s IRAs right for you?
Betterment’s automated IRA offerings apply to both its Digital and Premium investing plans. And though you won’t need a minimum to get started, you’ll either pay a 0.25% or 0.40% annual fee, depending on the plan you choose.
Its three available accounts — traditional IRA, Roth IRA, and SEP IRA — are all supported by an additional option: Roth conversion. With the conversion option, you can easily move funds from one type of IRA to another within the robo-advisor’s web platform or mobile app.
As with its regular investment accounts, Betterment also applies tax-loss harvesting to make sure you get the most out of your retirement investments. Plus, the investment app lets you set your retirement goals (e.g., ideal retirement age and target retirement amount) and track your progress toward them.
Are Ellevest’s IRAs right for you?
Ellevest offers automated IRAs for its Plus and Executive membership levels. In other words, if you don’t mind paying $5 or $9 per month, you’ll have the choice of opening a traditional or Roth IRA, and small businesses and self-employed individuals will have the option to automate an SEP IRA.
Like Betterment, Ellevest helps you map out how much you need to save by the time you retire. It also lets you roll over existing funds from 401(k)s or 403(b)s. And unlike Betterment, you can take advantage of complimentary financial planning sessions despite which plan you’re enrolled in.
However, while Ellevest accepts clients of all demographics, its services are specifically geared toward women. In fact, the company says its retirement strategies consider various aspects of women’s lives, such as pay gaps, longer lifespans, and career breaks.