Closing a Betterment account starts in your account settings on the web. You’ll need to withdraw or transfer all funds before Betterment will let you fully close any account, so the process typically takes a few days depending on how you move your money. Here’s how to handle each step, including the tax considerations that could cost you if you’re not careful.
Steps to Close an Investment Account
Log in to Betterment from a web browser (not the mobile app) and go to Settings, then Accounts. You’ll see a list of every account you hold, each with a “Close account” option. Click it, and Betterment will check whether the account still has a balance. If it does, you’ll be prompted to withdraw the funds first.
Once your withdrawal finishes processing, go back to Settings, then Accounts, and click “Close account” again. This time the closure will go through. Joint investment accounts work the same way: either account holder can close a shared account directly from the Accounts page.
Keep in mind that selling your holdings and withdrawing cash is not instant. Betterment sells positions during the next trading window, and the cash typically settles within two to three business days. After that, the transfer to your external bank account can take another few business days. Plan for roughly a week from the time you initiate the withdrawal to when you can complete the closure.
Closing Checking and Cash Reserve Accounts
The path is the same: log in, go to Settings, then Accounts. Find the checking or Cash Reserve account you want to close, click the three dots to the right of it, and select “Close Account.” Before closing, make sure you’ve moved any remaining balance to an external bank account and that no pending transactions (like direct deposits or scheduled bill payments) are still tied to the account. Pending transactions can delay or complicate the closure.
If you use Betterment Checking as your primary bank account, update your direct deposit and any automatic payments with your new banking details before you close. Missing this step could mean bounced payments or lost deposits during the transition.
Transferring to Another Brokerage Instead
If you’re moving to a different brokerage rather than simply cashing out, you have two options: sell everything and withdraw the cash, or request an in-kind transfer through the ACATS system (the industry-standard process for moving investments between brokerages). The choice matters more than most people realize, especially for taxable accounts.
Betterment charges a flat $75 fee per investing account for outbound ACATS transfers. You initiate the transfer from the receiving brokerage, not from Betterment. Contact your new brokerage, provide your Betterment account number, and they’ll handle the paperwork. Many brokerages will reimburse the $75 transfer fee if you ask or if your account meets a minimum balance.
An in-kind transfer moves your actual shares without selling them. For taxable brokerage accounts, this is often the better move because you avoid triggering capital gains taxes. When you sell everything to cash instead, every lot with a gain becomes a taxable event in that year. If your portfolio has appreciated significantly, the tax bill could be substantial.
Tax Implications of Cashing Out
The tax impact depends on the type of account you’re closing.
- Taxable investment accounts: Selling your holdings generates capital gains or losses. Short-term gains (on shares held less than a year) are taxed as ordinary income, while long-term gains get a lower rate. Betterment’s tax-loss harvesting feature may have already realized some losses over time, but a full liquidation could still produce a meaningful tax bill if your investments have grown.
- Traditional IRA or 401(k) rollover: If you transfer to another IRA at a different brokerage (either in-kind or as a rollover), you owe nothing in taxes. If you withdraw the money to your bank account instead, the entire amount counts as taxable income for the year. And if you’re under 59½, you’ll also owe a 10% early withdrawal penalty on top of that.
- Roth IRA: You can withdraw your contributions at any time without taxes or penalties. Earnings, however, follow the same age and five-year rules. Rolling over to a Roth IRA at another brokerage avoids the issue entirely.
- Checking and Cash Reserve: No tax consequences. These are cash accounts, not investments.
For retirement accounts, the simplest tax-free path is a direct rollover or transfer to an IRA at your new brokerage. This keeps the money in a tax-advantaged wrapper and avoids both income taxes and penalties.
What to Do Before You Close
Download your tax documents and account statements before finalizing anything. Betterment provides year-end tax forms (1099s for taxable accounts, 5498s for IRAs), but accessing them after closure may be more difficult. Save copies of your transaction history as well, since you may need cost basis information for future tax filings if you transferred shares in-kind.
If you have any recurring deposits set up, cancel them from within your Betterment account before closing. The same goes for any automated portfolio features like dividend reinvestment or recurring transfers from your bank. Betterment should stop these when the account closes, but cleaning them up first prevents any confusion with your bank.
Once all accounts are closed, Betterment will send a confirmation. If you no longer want a Betterment login at all, you can contact their support team to request full deletion of your profile.