# Betterment extends after-tax Roth strategy to self-employed 401(k) clients URL: https://www.financialadvsr.com/article/betterment-extends-after-tax-roth-strategy-to-self-employed-401-k-51e0e6 Published: October 20, 2026 By: Nora Kessler, Practice & Technology Correspondent Section: News Publisher: Financial ADVSR (https://www.financialadvsr.com) Betterment has introduced mega backdoor Roth capability for its solo 401(k) offering, open to direct customers and advisors using Betterment Advisor Solutions, according to its release. 401k Specialist reported on October 20, 2026 that Betterment has added mega backdoor Roth capability to its solo 401(k) plans, a feature aimed at self-employed workers who want to use more of their available tax-advantaged savings room. InvestmentNews reported the same day that self-employed clients gained the ability to put in after-tax money and convert it to Roth on the platform, linking the launch to the custodian's wider effort in retirement services aimed at RIAs. Betterment's own announcement, dated October 20, 2026, describes the process in steps. A customer makes an after-tax contribution online, receives a notification when the balance is ready to convert, and then starts the Roth conversion inside the account. Betterment supplies the tax forms. According to the release, advisors can handle the same steps for their clients, with tracking tools that measure contributions against yearly caps and alerts that flag when after-tax funds are ready for conversion. Contributions, conversions and 1099-R reporting are supported, according to the release. The capability is available to direct retail customers and to advisors who offer solo 401(k)s to their clients through Betterment Advisor Solutions, the firm's RIA custody arm. Betterment's release quotes its chief executive, Sarah Levy, saying the change makes it easier for self-employed investors to use the contribution limits available to them. The release also says the company intends to extend this feature to its workplace retirement plans within the next several months. On figures, Betterment's release puts the overall 2026 limit for the mega backdoor strategy at up to $72,000, excluding eligible catch-up contributions. That number is a contribution limit, not a measure of assets or revenue. 401k Specialist separately notes that solo 401(k) employee deferrals top out at $24,500 plus catch-up contributions, while employer contributions max out near 20% of net self-employment income for sole proprietors or 25% of pay for S-corp or C-corp owners. Betterment LLC is an SEC-registered investment adviser with its principal office in New York, according to its public Form ADV disclosures. Its parent, Betterment Holdings, Inc., also owns the broker-dealer affiliate Betterment Securities, which is a FINRA and SIPC member, and clearing is handled by a third party, Apex Clearing Corporation, according to Betterment's disclosures. Betterment's own About page cites more than $70 billion in assets under management as of May 10, 2026. A Form ADV aggregator listing shows regulatory AUM of about $69.5 billion from a last filing dated June 30, 2026. The two figures are not measured the same way, and the aggregator listing is a regulatory figure rather than a company statistic. The solo 401(k) offering has a track record on the advisor side. InvestmentNews has reported that Betterment Advisor Solutions works with more than 600 advisory firms. Wealth Management reported in February 2025 that Betterment had added a solo 401(k) for advisors to its RIA custody platform, and InvestmentNews reported in April 2026 that the firm was widening its solo 401(k) push through Osaic and HUB advisors. Betterment's Q3 2026 advisor resources page had listed mega backdoor Roth as coming soon before the launch. The unit was renamed in September 2024 from Betterment for Advisors, and the change came with added portfolio management, high-yield cash and a combined retirement plan offering. The timing coincides with a pricing story in the custody market. InvestmentNews reported that Fidelity has set a $100 million minimum in custody assets that RIA clients must hold with it, and that Betterment will not charge its platform fee through December 31, 2028 to Fidelity RIAs that bring Betterment in as a custodian. According to the same InvestmentNews report, the fee typically falls between 0.12% and 0.20% annually, with the level depending on the total balances of a firm's clients. Commentary published by 247wallst described the fee waiver as a direct response to Fidelity's higher minimums. 401k Specialist notes that the approach is most effective when an advisor takes part, because Roth conversions cannot be undone and may bring tax consequences and penalties. That caution is a point advisors will likely need to weigh before recommending the feature to self-employed clients. The next step the company has named is the rollout to employer-sponsored plans, which it says is planned for the coming months, though the release gives no specific date. Key facts: - Betterment's release puts the overall 2026 mega backdoor limit at up to $72,000, excluding eligible catch-up contributions (Betterment release, October 20, 2026). - Solo 401(k) employee deferrals are capped at $24,500 plus catch-up contributions (401k Specialist). - Betterment's About page cites more than $70 billion in AUM as of May 10, 2026; a Form ADV listing shows about $69.5 billion regulatory AUM from a June 30, 2026 filing. - Betterment waives its platform fee through December 31, 2028 for Fidelity RIAs that add it as a custodian (InvestmentNews). Why it matters: For advisors serving self-employed clients, the feature adds a savings route that previously may have required a different provider or a manual process, but it also adds conversion tax questions that need to be explained in advance. Teams comparing custodians will likely weigh this capability alongside platform fees and minimums, since the fee terms and the feature set now move together in the same market. Sources: - 401k Specialist: https://401kspecialistmag.com/betterment-mega-backdoor-roth-solo-401k/ - InvestmentNews: https://www.investmentnews.com/goria/custodian/betterment-adds-mega-backdoor-roth-to-solo-401k-for-advisors/268662 - prnewswire.com: http://www.prnewswire.com/news-releases/betterment-launches-mega-backdoor-roth-capability-for-solo-401ks-302913702.html - 401kspecialistmag.com: https://401kspecialistmag.com/2027-401k-contribution-limits-all-but-official-25500-expected - betterment.com: https://www.betterment.com/advisors/resources/whats-new-from-betterment-advisor-solutions-q3-2026 - mysolo401k.net: https://mysolo401k.net/mycommunity/forums/discussion/%F0%9F%9A%80-does-betterment-solo-401k-support-mega-backdoor-roth-strategy/ - planadviser.com: https://planadviser.com/new-milestone-majority-of-hsa-assets-invested/?+research=