Robinhood IRA Review

What if I told you I’d give you up to $80 to open an IRA? You’ll have to give it back if you decide to move your money to another broker in the next five years. And sorry, I don’t offer any of that boring stuff like mutual funds, fixed-income investments or access to retirement planning tools or experts. But hey, how ‘bout that unheard-of IRA match?

That’s the deal on offer through June 28 at Robinhood — a 1% IRA match, or $1 for every $100 contribution up to the legally allowed annual limit ($7,000-$8,000) set by the IRS — and not much else when it comes to basic retirement investing support. Then again… that 1% match (3% for Robinhood Gold subscribers) sure is tempting, right?

I took the bait. I opened a Robinhood IRA account (my tenth IRA in twice as many decades), explored the app, chatted with customer service, did the math, and ultimately decided a $70-$80 match simply wasn’t worth the tradeoffs I’d have to make. But if you’re a self-directed equities investor who’s willing to do the heavy lifting required to manage a retirement portfolio on your own, Robinhood’s bare-bones IRA offering is worth checking out to take advantage of one of its 1%-3% match promotions. But first, read on for caveats galore.

Robinhood IRA pros & cons

Retirement account types

Robinhood’s IRA account types are limited to Roth, traditional and rollovers. The majority of investors won’t even notice what’s missing. But Robinhood is not a good choice if you’re self-employed (it doesn’t offer SEP or SIMPLE IRAs) or want to open a custodial IRA for a minor.

Despite its retirement account shortcomings, I’ve gotta hand it to Robinhood’s business-development chiefs for capitalizing on the single biggest pain point consumers face when contributing to an IRA: the lack of matching contributions. (For background, IRAs are self-funded. Unlike workplace retirement plans, there’s no benevolent employer kicking in money on your behalf.)

About that match: Robinhood has been running a series of IRA promotions that pay a 1% to 3% match on qualified IRA deposits. The terms vary — sometimes the match applies only to IRA contributions for the current tax year; other times the match applies to IRA transfers from another broker or 401(k) rollovers. In all instances subscribers who pay for Robinhood Gold membership earn a higher match percentage.

Is the match enough to make it worthwhile to open an IRA at Robinhood? Let’s do the math: If you contribute $7,000 to a Robinhood IRA today and get a 1% bonus, after 10 years Robinhood’s $70 match would grow to $151 in a portfolio earning an 8% average annual return. In 20 years you’d have an extra $326 in your account. Using the same 8% annual return, Robinhood Gold members who earn the 3% IRA match would have an extra $453 or $979 after 10 and 20 years, respectively.

If Robinhood continues to offer a 1% to 3% IRA match and you contribute enough to earn it each year, the case for opening an account becomes exponentially better. (See more on the Robinhood IRA match in the FAQs below.)

Do other brokers offer an IRA match?: Much like Robinhood’s $0-commission trading eventually forced industry-wide adoption, it appears that the iRA match program has inspired several copycats. In the run-up to tax filing season and beyond, brokers like SoFi Invest and Webull have chummed the waters with 2% to 3.5% IRA match offers. Retirement account shoppers who catch Fidelity and Charles Schwab on a good day have been able to score an even better deal by snagging $100-plus sign-up bonuses for making a minimal $50 IRA contribution.

» Here’s how to decide between a Roth IRA vs. a traditional IRA.

Robinhood IRA fees

Robinhood is known for its $0-commission stock, ETF and options trading. (It doesn’t offer mutual funds, bonds or broker-assisted trades, so no fees to fret over there!) As for other potential IRA fees:

IRA account fee: Like most brokers, Robinhood does not charge IRA account setup or maintenance fees. It also does not charge for its retirement portfolio investment recommendations, described under “Managed investment options” below.

Transfer in vs. transfer out fees: Although Robinhood doesn’t charge an IRA closure fee, moving your money out of the account to another brokerage through ACATS will cost you $100, which is one of the highest transfer-out fees we’ve seen. For comparison, Charles Schwab, E*TRADE and Merrill Edge charge customers $50-$75. Customers pay $0 at Fidelity and Vanguard. Robinhood also offers to cover up to $75 in outgoing transfer fees charged by the broker you’re quitting for customers who move over $7,500 or more.

Early IRA match removal fee: Customers who withdraw IRA contributions that earned a 1% match before the required five-year vesting period will pay a fee that’s equal to the match you earned on the money being withdrawn. For example, if you contributed $1,000 and earned a $10 match and then withdrew $800 a year later, you’ll owe Robinhood $8 (the 1% you earned on the $800 you’re withdrawing).

Robinhood Gold subscription fee: For $6.99 a month (sometimes less if Robinhood is running a special) Gold members can access additional tools (e.g. Level 2 streaming quotes and Morningstar reports) and earn a higher interest rate on uninvested cash. Most importantly for IRA investors, Gold members receive an additional 2% match on IRA contributions on top of the standard 1%.

Self-directed investment options

Robinhood’s stock jock ethos – the app’s hyperactive trading vibe touting round-the-clock investing — is the opposite of the ho-hum well-diversified long-term buy-and-hold approach we recommend for IRA investors. That said, if you are a somewhat experienced self-directed investor interested solely in stocks and ETFs, Robinhood might suit. On the flip side, sorry, mutual fund and fixed-income investors: There’s nothing for you to see here. Please proceed straight to Fidelity.

Stocks and ETFs: Investors who are comfortable self managing a portfolio of equities are Robinhood’s target audience. Here you’ll find more than 5,000 stocks and ETFs (limited to those listed on U.S. exchanges) to your heart’s content (Note: Cryptocurrency trading is not available in Robinhood IRAs.)

Fractional shares and DRIPs: Robinhood also makes it easy for those with smaller investing budgets to build a diversified portfolio with fractional shares of stocks and ETFs. Like similar offerings from Fidelity (“Stocks by the Slice”), Interactive Brokers (via the IBKR Lite platform), and SoFi Invest (“Stock Bits”), the minimum investment is just $1. Just be sure to go into your settings and enable automatic dividend reinvestments if you don’t want any uninvested cash to accrue in your Robinhood IRA.

Here’s what Robinhood doesn’t offer:

Mutual funds: The lack of mutual funds — a retirement investing staple — is a noteworthy hole in Robinhood’s investing lineup. This is a deal breaker for the huge swath of savers who use mutual funds as the foundation of a well-diversified retirement portfolio. Nearly 70 million U.S. households own mutual funds, according to the latest data from the Investment Company Institute.

The workaround in a Robinhood IRA account is buying ETFs (which contain a mix of stocks). Just know that building a retirement portfolio with ETFs requires a lot more legwork (allocating your assets, rebalancing your holdings over time) than, for example, buying a single target-date mutual fund.

Fixed-income investments: Those with a more conservative investing bent will be disappointed by Robinhood’s lack of individual bonds, certificates of deposit (CDs) and other fixed income investment options.

» Investing with Robinhood: See what the investing aces at StockBrokers.com think about the broker’s offerings in their Robinhood review.

Managed investment options

It’s a misnomer to call Robinhood’s retirement portfolio recommendations a “managed investment” offering. In my experience it’s “robo-lite”: an algorithmic tool that spits out a list of starter investments (a handful of ETFs) to put your investment dollars to work. After that, you’re on your own: Robinhood does not offer ongoing portfolio management support.

Here’s how it works:

1. Go to “Get guided help with investing” in the app: User tip: Ignore the outdated instructions on Robinhood’s website instructing you to click “Find Investments.” Answer six questions about your income, investing experience, risk tolerance, whether you have investments outside of Robinhood, main investment goal and what age you plan to retire.
2. Get your portfolio recommendation: Based on my age (provided during account setup) and questionnaire responses, Robinhood recommended that I invest in six ETFs with a recommended portfolio mix of 40% bonds and 60% stocks. After deeming the mix too conservative for my tastes, I was unable to adjust my original inputs. (I assume it’s because I closed the app and customers are only allowed one suggested portfolio per IRA.)
3. Make the initial investment: Robinhood requires a $20 minimum to invest in the initial investment in portfolio recommendations. Your cash is split among the recommended ETFs based on the broker’s suggested asset allocation model.
4. And that’s it: Godspeed and good luck to you in the future!

The biggest shortcoming of Robinhood’s guided investment recommendations is that all semblance of portfolio management ghosts you once the picks are presented. There’s no portfolio rebalancing or ongoing monitoring of investments, future adjustments to what you contribute must be done piecemeal, and retirement recommendations aren’t even offered in some accounts.

Even at $0 in fees, for my money — and yours, especially if you’re just starting out — Fidelity Go is a better bet than Robinhood’s retirement portfolio recommendations tool. Fidelity waives its 0.35% management fees for customers investing less than $25,000; and ongoing portfolio management is included. Even better, Fidelity builds Go portfolios using its own 0%-expense-ratio index mutual funds, so savers pay no management fees at all.

Retirement planning tools

Crickets. There are no retirement planning tools in the Robinhood app. The broker sends customers to its learning center, where retirement-related content is sprinkled sparsely among articles like “What Is Weighted Average Cost of Capital (WACC)?” and “What Is an Iron Condor?”

When I did stumble upon IRA-related articles, out-of-date information — like 2022 IRA and 401(k) contribution limits in “How much should I save for retirement?” — didn’t inspire much confidence. To be fair, I love the Robinhood Snacks daily newsletter and recommend it for a breezy read on the market’s goings-on.

Doing an IRA rollover with Robinhood

Robinhood’s one-size-hopefully-fits-all IRA rollover instructions pale in comparison to the step-by-step hand-holding available at more established brokers. However, a partnership with Capitalize, an online platform that manages the transfer process from start to finish, is a welcome addition. It’s free to the user since Capitalize earns a commission for routing users to “preferred partners” like Robinhood and others.

A few things to know about Robinhood rollovers:

Robinhood only accepts rollovers in cash: This means you’ll have to liquidate (sell out of) your investments in your old workplace retirement plan to move the money into a Robinhood IRA, and rebuild your retirement portfolio from scratch. Ouch.

You’ll lose access to any mutual funds in your old 401(k) or 403(b) plan: Because Robinhood doesn’t offer mutual funds, rollover customers lose the convenience of having a target-date mutual fund that offers built-in diversification and automatic rebalancing. Index fund investors will have to recreate their old fund portfolio with exchange-traded funds (ETFs).

Robinhood covers some transfer fees: If your old provider hits you with a transfer fee, Robinhood will reimburse you for up to $75 if you move $7,500 or more into a Robinhood IRA.

You may earn a rollover match from Robinhood: Keep checking the Robinhood app or website for the latest promotions — I saw one come and go while I was writing this review.

Bottom line

Even though Robinhood’s IRA account offerings don’t yet measure up to the seasoned (and equally free) offerings at Fidelity, Schwab and Vanguard, it has earned my respect for turning the fusty old retirement account business on its head. We have Robinhood to thank for inspiring other brokers to jump on the IRA match bandwagon. If nothing else, the match is a great perk for self-directed savers who don’t mind the limited investment selection (stocks and ETFs only) and lack of retirement planning advice.

But the inability to invest in closed-end mutual funds? Zero ongoing portfolio management help? No tools or access to retirement planning experts? Even with the IRA match, sorry Robinhood, it’s a hard pass from me.

FAQs

What is the 2024 IRA contribution limit for Robinhood IRA?

The 2024 IRA contribution limit is $7,000 if you’re under age 50, and $8,000 for those 50 and older. The limit is set by the IRS and applies to the total annual amount of new money an investor is allowed to contribute to an IRA at any broker. If you invest in both a traditional and a Roth IRA in the same year, the total of your combined contributions still may not exceed that $7,000/$8,000 limit. (IRA rollovers aren't subject to these contribution limits.) See “What is an IRA?” for more on IRA contribution and withdrawal rules for 2024.

How does the Robinhood IRA 1% match work?

Robinhood frequently offers a bonus in the form of an IRA match for customers who contribute money to a Robinhood traditional, Roth or rollover IRA or transfer money/assets from another broker into a Robinhood IRA.

Although the terms of Robinhood IRA match promotions vary, the standard offer is a 1% to 3% match on eligible deposits. Another constant is that the higher IRA match rate always requires a Robinhood Gold membership (cost: $5-$6.99/month, depending on what mood the broker is in).

How the match works: Once the inbound deposit or transfer of assets is complete, Robinhood automatically calculates the match and deposits that amount into your account. Note that the match does not count towards annual IRA contribution limits set by the IRS.

What’s the catch? There are several. In order to keep the match, customers are required to hold eligible contributions in a Robinhood IRA for at least five years, though the length may be shorter for Robinhood Gold members. Move your money out earlier, and you will forfeit the corresponding match, or be hit with an "IRA match early removal fee" if your account doesn't have enough to reimburse Robinhood for the amount it kicked in. Bonus caps apply to annual IRA contributions — $70 or $80 (or $210-$240 for Gold members), which corresponds to the IRS's annual IRA savings limits.

Are Robinhood IRAs FDIC insured?

If you open an IRA at Robinhood your money is protected by insurance from the SIPC (Securities Investor Protection Corporation). This coverage applies to the securities (stocks) and uninvested cash in your account and kicks in if Robinhood goes out of business and you’re unable to access money held in your account, whether it’s an IRA or taxable brokerage account.

In addition to standard SIPC coverage of up to $500,000 in protection (including $250,000 for claims for cash), Robinhood carries supplemental SIPC insurance which covers up to $50 million in securities and $1.9 million in cash once SIPC coverage is exhausted.

Note: SIPC does not cover investment losses due to performance. Direct your ire and strongly-worded missives about disappointing investment results to Mr. Market, corporate management, the economy, or r/wallstreetbets.

Can I do a rollover from my IRA to Robinhood?

Moving an IRA from one broker to another is called an IRA transfer. Robinhood not only accepts IRA transfers, it is also known for sweetening the pot with a 1% to 3% unlimited bonus on the amount of money you move into a Robinhood IRA. The offer comes and goes and, of course, there are strings attached. (See “How does the Robinhood IRA match work?” above for more.)

Important note: Only eligible assets in your IRA can be transferred into Robinhood. Any stocks or ETFs you have in your old IRA that Robinhood also offers will be transferred. Any assets that Robinhood does not offer (e.g. mutual funds, bonds, CDs) will need to be sold first before the cash can be transferred into a Robinhood IRA.

Methodology

Our mission at investor.com is to provide Americans with in-depth, unbiased reviews of financial products and services, based on our personal, hands-on testing and data collection. Our ratings are based on this research and on our in-house experts’ deep authority in the field. Brokers and other financial service providers cannot pay for preferential treatment. See more about why readers can trust our analyses.

Our research team conducts thorough testing on a wide range of features, products, services, and tools for U.S. investors. We personally test all available trading platforms and tools for each broker and evaluate them based on multiple variables. All research, writing and data collection at investor.com is done by humans, for humans. Read our generative AI policy here.

For this review of individual retirement accounts, we thoroughly examined all retirement-related accounts and services available to U.S. customers at the broker in question and looked for features important to long-term savers, such as types of accounts available, fees and planning tools. Each broker’s IRA offerings are given a rating on a five-star scale based on this data collection and individual evaluation. Accuracy is of the utmost importance to investor.com, and our data is checked on a rolling basis year-round.

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