Robinhood offers two tiers of IRA contribution matching:
- Standard Robinhood members get a 1% match on new contributions.
- Robinhood Gold members get a 3% match on new contributions. (Robinhood Gold costs $5 per month.)
These matches apply to ongoing contributions to an existing Robinhood IRA.
The match is classified as interest income, so it doesn’t count towards your annual contribution limit.
To earn and keep the 3% match, you must maintain your Robinhood Gold membership for one year from the date of your first contribution with a 3% boost. Additionally, the funds that earned the match must be kept in the account for at least five years to avoid a potential Early IRA Match Removal Fee.
Standard and Gold members can also get a 1% match when transferring funds from another IRA or 401(k) to a Robinhood IRA. For example, if you roll over $100,000, you’ll receive a $1,000 bonus. You must keep the funds in the account for at least five years for rollovers or transfers.
How Does The Robinhood IRA Match Work?
The Robinhood IRA match resembles an employer matching your 401(k) contributions. If you contribute $7,000 to your IRA (Roth or traditional), the maximum you can earn is $70, or $210 with a Robinhood Gold subscription. The match is deposited into your Robinhood IRA, not your cash brokerage account.
You continue to get this match on all contributions in the ensuing years. This can easily compensate for Robinhood’s $5 monthly fee for Gold membership.
Is The Robinhood IRA Worth It?
Considering this is a long-term commitment, it’s important to determine whether Robinhood is the best place to park your retirement funds.
A few things to know about the Robinhood IRA are:
- You can have both a Roth account and a traditional account.
- While Robinhood doesn’t offer mutual funds, you can access various ETFs.
- You can’t trade crypto or options within your Robinhood IRA.
- Robinhood offers point-in-time retirement portfolio recommendations, providing a starting point for investors based on their goals and risk tolerance. However, these recommendations are not automatically updated or rebalanced. While this approach gives you the flexibility to manage your portfolio as you see fit, it also means that you’ll need to rebalance your portfolio yourself. Robinhood’s IRA isn’t a great fit if this sounds too complex. Instead, I’d consider a brokerage like M1 (read our M1 Review) that offers a hands-off retirement portfolio continuously optimized without fees.
While Robinhood does have a free option, it’s worth paying $5 per month for a Gold account if you plan on maxing out your annual contributions and can manage rebalancing with ETFs.
Since you earn a 3% match bonus on new contributions, the break-even point for coming out ahead with the Gold account is $3,000 annually. If you’re contributing less than $3,000 annually, it’s better to take the 1% match offered by the free account.
While Robinhood is known for its free trading, it is wise to separate the idea of trading individual stocks for profit from investing for retirement.
Investing a large portion of your money in individual stocks risks your retirement savings. Therefore, the Robinhood IRA is best for those who want access to low-cost ETFs and can manage their portfolio independently to help them achieve their retirement goals.
Visit Robinhood to learn more.
Financial Tips and Deals Every Friday
Join over 10,000 subscribers and stay ahead with personal finance insights, the best deals, and the best money-making opportunities every Friday.
