Email FacebookTwitterMenu burgerClose thin

Should You Take Advantage of Robinhood’s 1% Match on IRAs and Roth IRAs?


After bursting on the financial scene during the meme-stock hoopla and attracting hordes of investors at the beginning of the pandemic lock-downs, trading platform Robinhood will start offering Individual Retirement Accounts – and offering investors a 1% “match” on their contributions.

The announcement from Robinhood focuses on people working in the new gig economy, who aren’t eligible for the traditional workplace retirement offerings, such as 401(k) accounts and are responsible for building their own retirement strategies.

“People are relying on themselves,” the announcement at said. “They’re taking on gig work, side hustles and building their own companies. Tools that can make it easier to save for retirement – such as automatic transfers from a paycheck or contribution matching – are often not available to the gig economy – which makes up as much as 40% of America’s total workforce.”

Robinhood will offer the match instantly on contributions made from any linked external bank account but not on rollovers from other IRAs or from 401(k) workplace trading accounts. But to keep the match, customers will be required to keep the money that received the matched contributions in their Robinhood IRAs for at least five years.

For more help determining how to invest for retirement, consider matching with a vetted financial advisor for free.

Should You Put Your Money in a Robinhood IRA?

With IRA contribution limits set at $6,500 for 2023 by the IRS, that means investors who max out their contributions would score an additional $65 for the year from Robinhood’s match. Investors older than 50 are allowed to make an additional $1,000 in catch-up contributions, which would add another $10 per year to their match.

Customers can invest in individual stocks and ETFs for their IRAs, but not cryptocurrency, in either a traditional tax-deferred IRA, where investors can get a tax deduction on contributions but pay tax on the principal and gains when they withdraw money in retirement, or in a Roth IRA, where contributions are made with after-tax money and all withdrawals are tax-free. Investors can select individual stocks or ETFs to build a portfolio, use recommendations from the app itself, or a mix of both.

The long-term nature of retirement savings would seem to be at odds with the image of app-based Robinhood has created of young investors hopping in and out of meme stocks, such as GameStop or the AMC theater chain. But Robinhood has said that most of its customers have been buy-and-hold investors. Those customers, however, have been dwindling as the meme-stock craze has faded. According to The Wall Street Journal, “The average daily number of retail trades of stocks and options on Robinhood in October declined 36% from the same month last year.” Robinhood itself isn’t profitable at this time.

Sign-ups for Robinhood IRAs started Dec. 6, but people can sign up to apply for early access via a waitlist and will receive access on a rolling basis over the following weeks. The accounts will be fully available in January, when the start of the tax-preparation season typically sees investors making IRA contributions to reduce their tax liability for the previous year, as long as those contributions are made before the tax filing deadline in April.

Robinhood customers who want access sooner can refer a friend to the IRA waitlist to receive early access to a retirement account.

Bottom Line

Robinhood, the investing platform that rose to fame for retail investors amid the meme stock craze, is offering IRAs and Roth IRAs with a 1% match. Of course, given the $6,500 limit to contributions on IRAs, that’s adding just $65 a year to your contributions — and additional $10 for those 50 and up who can make annual catch-up contributions of another $1,000. For help making decisions around your retirement planning, consider matching with a vetted financial advisor for free.

Tips for Getting Retirement Ready

  • Industry experts say that people who work with a financial advisor are twice as likely to meet their retirement goals. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • If you want to set up and plan your retirement goals, SmartAsset’s retirement calculator can help you figure out how much you will need to save to retire comfortably.
  • Another easy way to save for retirement is by taking advantage of employer 401(k) matching. SmartAsset’s 401(k) calculator can help you figure out how much you will have based on your annual contribution and your employer’s matches.

Photo credit: © Chan, ©