The only reason that Betterment would be correct in not reporting the movement of funds from the traditional IRA is if the receiving plan was not a 401(k) but was a SEP plan or a SIMPLE-IRA plan. Even if the employer's plan is truly a 401(k) plan, if the request to Betterment was made improperly (perhaps by requesting a "transfer" instead of a direct rollover) they might have thought they were doing a trustee-to-trustee transfer to an IRA-based plan, not a direct rollover to a qualified retirement plan. Trustee-to-trustee transfers between IRAs are not reportable. (Of course doing a trustee-to-trustee transfer to an IRA-based employer plan does you no good since it's just another IRA that must be included in the year-end balance on Form 8606 line 6.)
