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Saving for retirement isn't a sprint or even a marathon — it's an odyssey. The amount of money you're able to sock away each year for your retirement will depend on a mixture of discipline, planning and luck. Every dollar someone else (such as an employer) contributes to your retirement savings is a victory, particularly when you first start saving and can take advantage of compound interest.
That's what makes Robinhood's announcement that it would match the IRA contributions of its users so enticing. Individuals usually don't receive contribution matches through an IRA account; a match is typically something employees receive through their workplace 401(k) account, which leaves out self-employed and gig workers.
Minimum deposit and balance
There is a $20 minimum to invest in the portfolio Robinhood recommends to you
Robinhood doesn't charge any management fees or commission fees for the IRA account. However, an IRA Match Early Withdrawal Fee may apply in some circumstances
The Robinhood IRA offers a 1% match on eligible contributions up to IRA contribution limits. Limitations apply.*
Traditional IRA and Roth IRA
Stocks and ETFs (users can invest in Robinhood's selection of 5–8 recommended ETFs, pick their own, or do a combination of both). According to the website, eligible users will soon be able to trade options in their IRA
Robinhood offers education materials on their website
See our methodology, terms apply. Does not apply to crypto asset portfolios.
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With Robinhood Retirement, you'll receive an extra 1% added to your IRA account on eligible contributions up to the annual contribution limit. Robinhood offers both traditional IRAs and Roth IRAs. To count as an eligible contribution, the funds must be new deposits (not a rollover, transfer or conversion) made from a linked bank account. Note that contributions coming from your Robinhood brokerage account or spending accounts are not eligible.
According to Robinhood's website, once you make a contribution, you should be able to instantly see the match in your account.
- $6,500 if you're under age 50
- $7,500 if you're age 50 and older
Doing the math on the match and contribution limits, a $6,500 yearly contribution would earn a $65 match each year. A $7,500 annual contribution earns a $75 match. So if you max out your $6,500 contribution every year for 40 years to receive the full $65 match, the platform will have paid you a total match of $2,600 over the course of those years.
This doesn't feel like a lot when you consider that many employers match up to 6% of employee 401(k) contributions. But this is where the power of investing comes in. Robinhood did the math: Let's say you contribute $6,000 to your IRA every year and receive $60 a year for a 1% match (which works out to $5 a month) for 40 years. Assuming an average 10% yearly investment return, that 1% match could potentially result in an extra $26,000 or more over 40 years. Of course, this return depends on the market following its historical trends during the next four decades, which isn't guaranteed.
Robinhood has a somewhat convoluted set of rules about whether you can keep your match when you withdraw money from your IRA. To put it as simply as possible:
- You can keep your match if you've kept eligible contributions in the IRA for at least 5 years.
- If you withdraw money from the IRA before 5 years, the only way you keep your match is if the balance of your IRA after the withdrawal is equal or greater than the amount you contributed to earn the match.
Confused? You're not alone. Here's an example to help clear things up:
Say you earned a $10 match on a contribution of $1,000 and need to withdraw money less than five years after you made the $1,000 contribution. According to Robinhood's rules, you can still keep the match as long as your remaining balance is above $1,000 after the withdrawal.
If your remaining balance is lower than the contribution that earned the match, you may be charged an early removal fee This fee is equal to the IRA Match amount earned. Remember, this fee only applies if it's been fewer than five years after you made the contribution.
To play it safe, try to avoid withdrawing money from your IRA — or any other retirement account. Instead, turn to an emergency savings account if you need to access cash for an unforeseen circumstance.
Find the best savings account for you: Help your money grow by finding the savings account that offers the best rates and features for you.
Although Robinhood doesn't charge any management fees on this account, there may be an early IRA removal fee for withdrawing money from your account after fewer than five years (see above for details).
While other IRA providers don't provide a contribution match, some do offer perks in the form of welcome bonuses. Betterment, for instance, will manage up to $5,000 for you for free for one year after making a qualifying deposit within 45 days of account opening. And currently, if you open a new IRA with Fidelity and deposit a least $50, they'll give you a $100 bonus.
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. For example, Betterment doesn't require clients to maintain a minimum investment account balance, but there is a ACH deposit minimum of $10. Premium Investing requires a $100,000 minimum balance.
Fees may vary depending on the investment vehicle selected, account balances, etc. Click here for details.
Stocks, bonds, ETFs and cash
Betterment offers retirement and other education materials
Terms apply. Does not apply to crypto asset portfolios.
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No minimum to open a Fidelity Go® account, but minimum $10 balance according to the investment strategy chosen
Fees may vary depending on the investment vehicle selected. Zero commission fees for stock, ETF, options trades and some mutual funds; zero transaction fees for over 3,400 mutual funds; $0.65 per options contract. Fidelity Go® has no advisory fees for balances under $25,000 (0.35% per year for balances of $25,000 and over and this includes access to unlimited 1-on-1 coaching calls from a Fidelity advisor)
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Robo-advisor: Fidelity Go® IRA: Traditional, Roth and Rollover IRAs Brokerage and trading: Fidelity Investments Trading Other: Fidelity Investments 529 College Savings; Fidelity HSA®
Stocks, bonds, ETFs, mutual funds, CDs, options and fractional shares
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Robinhood Retirement offering an IRA match is certainly a step in the right direction since it gives people a chance to grow their retirement savings a little bit quicker. A 1% match might not seem significant, but those small additions can compound over time thanks to the power of investing. Plus, for many users, receiving even a small match may be a lot better than receiving none at all.
If you do choose to use this retirement account, just keep an eye on the early match removal fee and the possibility of getting your match revoked for withdrawals made before the five-year mark on your deposits.