IRA overview | Robinhood

IRA overview

Individual retirement accounts (IRA) allow you to invest for retirement. Any earnings have tax-deferred or tax-free growth potential, so you will keep more of your money.

Types of IRAs

Robinhood offers 2 different types of retirement accounts: traditional IRA and Roth IRA. You can open 1 of each type of IRA at Robinhood, even if you already have an IRA at another financial institution or a workplace retirement plan, like a 401(k).

Traditional IRA

A traditional IRA allows you to invest for retirement with pre-tax dollars and tax advantages. This means you may be able to deduct qualified contributions now and pay taxes later upon withdrawal or distribution. Your contributions may be fully or partially deductible, depending on your filing status, income, and if you (or your spouse) are covered by a workplace retirement plan.

For the 2024 tax year, anyone with earned income is eligible for an annual contribution limit of $7,000 if you’re under age 50 (or $8,000 if you’re age 50 or older).

Roth IRA

A Roth IRA allows you to contribute after-tax dollars to invest for retirement. This means you pay taxes on contributions now with potential tax-free withdrawals later. Any earnings are tax and penalty free if they meet certain requirements.

For the 2024 tax year, you’re eligible to contribute if your income is under $161,000 if filing single, and under $240,000 if filing jointly—with an annual contribution limit of $7,000 (or $8,000 if you’re over age 50).

For more details, check out IRS Contributions to IRAs.

Set up your IRA

To begin, select RetirementGet started and then follow the prompts to set up your account within the Robinhood app or on the web. You can open a traditional IRA, a Roth IRA, or both. If you skip opting in on features, you can always opt in later.

Next, you can choose to either get a new, one-time recommended portfolio or pick your own investments for your IRA.

A portfolio is a group of investments, and each recommended portfolio includes 5-8 exchange-traded funds (ETFs) that we choose for you with an algorithm-based investment process we built. Our process uses your answers to our questions to match you to a portfolio that aims to work with your retirement timeline. Read about the details in Retirement recommendations.

You can also create your own portfolio by exploring investments, such as stocks and ETFs, and options (subject to eligibility requirements).

IRA limited margin account and cash account

IRA limited margin accounts let you trade with unsettled funds from stock and option sales. With cash accounts, you’ll need to wait 2 days to trade with funds from stock sales and 1 day to trade with funds from option sales.

Note

If you trade using unsettled funds, it could trigger pattern day trader rules. Day trading activities should be avoided inside retirement accounts given the risk of losing all funds involved.

You can’t borrow against the value of your IRA holdings or create a debit balance like with true margin investing in your individual investing account. Also, the IRS’s annual contribution limits for IRAs may prevent the deposit of additional funds to meet day trade requirements.

Switch accounts

  1. Select Account (person) → Menu (3 bars) or Settings
  2. Select Investing
  3. Select your IRA
  4. In Account type, select either Switch to limited margin account or Switch to cash account
Note

If you’d like to switch to a limited margin account, you’ll need to do it in the app.

How to fund your IRA

When you set up your IRA, you can link both your Robinhood and external bank accounts in your Retirement dashboard:

  1. Go to AccountMenu (3 bars) or Settings
  2. Select Transfers
  3. Select Transfer accounts to Robinhood or in Linked accounts, select Add new account
  4. Follow the prompts to link accounts and transfer funds

To transfer money from an existing IRA at another firm, or rollover money from an employer-sponsored 401(k), check out Rollover and transfer options.

Keep in mind

Remember, the match must be held in the Robinhood IRA for at least 5 years to avoid the possibility of a withdrawal fee.

IRA match

The IRA match is an extra 3% match with Robinhood Gold or 1% without that Robinhood adds to your IRA for making eligible contributions. All IRA transfers and 401(k) rollovers earn 1% with or without Robinhood Gold. That means you’ll automatically get an extra 1% or 3% on every dollar you contribute every year, up to the annual IRA contribution limits set by the IRS. It’s not counted toward your annual contribution limits, and is typically available to invest immediately.

For details, check out the IRA match FAQ, including important limitations.

Your securities and cash are protected by SIPC

SIPC, which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash) per account. Explanatory brochure available upon request or at www.sipc.org.

Keep in mind

SIPC coverage does not protect against a loss in the market value of securities.

Disclosures

Investors should consider the investment objectives and unique risk profile of any Exchange Traded Product (ETP), including any Exchange-Traded Fund (ETF) and any Exchange-Traded Notes (ETNs), carefully before investing. A prospectus contains this and other information about the ETP and should be read carefully before investing. You can access an ETF’s details page for a prospectus.

Recommendations are one-time only. Any additional investment is at your sole discretion. Retirement recommendations aren’t available in Massachusetts at this time. More details are available in Retirement Recommendations.

You must keep the funds that earned the match in the account for at least 5 years to avoid the possibility of a fee when withdrawn. For more information, review the IRA match FAQ.

Funds being contributed into or distributed from retirement accounts may entail tax consequences. Contributions are limited and withdrawals before age 59 1/2 may be subject to a penalty tax.

Contents provided are for informational purposes only and don’t constitute tax or investment advice. For specific questions, you should consult a tax professional. Robinhood does not provide tax advice. Links to third party sites are being provided for informational purposes only.

All investments involve risk and loss of principal is possible. Investors should consider their investment objectives and risks carefully before investing.

Investors should consider the investment objectives and unique risk profile of any Exchange Traded Product (ETP), including any Exchange-Traded Fund (ETF) and any Exchange-Traded Notes (ETNs), carefully before investing. A prospectus contains this and other information about the ETP and should be read carefully before investing. You can access an ETF’s details page for a prospectus.

The Robinhood IRA is available to any of our US customers with a Robinhood brokerage account in good standing. Note, if you have a B-Notice, you won’t be able to open an IRA until your account restrictions are lifted.

Securities trading is offered through Robinhood Financial LLC, a registered broker-dealer and Member SIPC, and a subsidiary of Robinhood Markets, Inc. (Robinhood).

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All investing involves risk.

Brokerage services are offered through Robinhood Financial LLC, (“RHF”) a registered broker-dealer (member SIPC) and clearing services through Robinhood Securities, LLC, (“RHS”) a registered broker dealer (member SIPC). Cryptocurrency services are offered through Robinhood Crypto, LLC (“RHC”) (NMLS ID: 1702840). Review a list of RHC licenses for more information.The Robinhood Money spending account is offered through Robinhood Money, LLC (“RHY”) (NMLS ID: 1990968), a licensed money transmitter. Review a list of our licenses for more information. Credit card products are offered by Robinhood Credit, Inc. ("RCT") (NMLS ID: 1781911 and issued by Coastal Community Bank, Member FDIC, pursuant to a license from Visa U.S.A. Inc.

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RHF, RHY, RHC, RCT, and RHS are affiliated entities and wholly owned subsidiaries of Robinhood Markets, Inc. RHF, RHY, RHC, RCT, and RHS are not banks. Products offered by RHF are not FDIC insured and involve risk, including possible loss of principal. RHC isn’t a member of FINRA and accounts are not FDIC insured or protected by SIPC.

RHY is not a member of FINRA, and products are not subject to SIPC protection, but funds held in the Robinhood spending account and Robinhood Cash Card account may be eligible for FDIC pass-through insurance (review the Robinhood Cash Card Agreement and the Robinhood Spending Account Agreement).

Options trading entails significant risk and is not appropriate for all customers. Customers must read and understand the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount.

Commission-free trading of stocks, ETFs and options refers to $0 commissions for Robinhood Financial self-directed individual cash or margin brokerage accounts that trade U.S. listed securities and certain OTC securities electronically. Keep in mind, other fees such as trading (non-commission) fees, Gold subscription fees, wire transfer fees, and paper statement fees may apply to your brokerage account. Please see Robinhood Financial's Fee Schedule to learn more.

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All investing involves risk.

Brokerage services are offered through Robinhood Financial LLC, (“RHF”) a registered broker-dealer (member SIPC) and clearing services through Robinhood Securities, LLC, (“RHS”) a registered broker dealer (member SIPC). Cryptocurrency services are offered through Robinhood Crypto, LLC (“RHC”) (NMLS ID: 1702840). Review a list of RHC licenses for more information.The Robinhood Money spending account is offered through Robinhood Money, LLC (“RHY”) (NMLS ID: 1990968), a licensed money transmitter. Review a list of our licenses for more information. Credit card products are offered by Robinhood Credit, Inc. ("RCT") (NMLS ID: 1781911 and issued by Coastal Community Bank, Member FDIC, pursuant to a license from Visa U.S.A. Inc.

The Robinhood Cash Card is a prepaid card issued by Sutton Bank, Member FDIC, pursuant to a license from Mastercard® International Incorporated. Mastercard and the circles design are registered trademarks of Mastercard International Incorporated.

RHF, RHY, RHC, RCT, and RHS are affiliated entities and wholly owned subsidiaries of Robinhood Markets, Inc. RHF, RHY, RHC, RCT, and RHS are not banks. Products offered by RHF are not FDIC insured and involve risk, including possible loss of principal. RHC isn’t a member of FINRA and accounts are not FDIC insured or protected by SIPC.

RHY is not a member of FINRA, and products are not subject to SIPC protection, but funds held in the Robinhood spending account and Robinhood Cash Card account may be eligible for FDIC pass-through insurance (review the Robinhood Cash Card Agreement and the Robinhood Spending Account Agreement).

Options trading entails significant risk and is not appropriate for all customers. Customers must read and understand the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount.

Commission-free trading of stocks, ETFs and options refers to $0 commissions for Robinhood Financial self-directed individual cash or margin brokerage accounts that trade U.S. listed securities and certain OTC securities electronically. Keep in mind, other fees such as trading (non-commission) fees, Gold subscription fees, wire transfer fees, and paper statement fees may apply to your brokerage account. Please see Robinhood Financial's Fee Schedule to learn more.

Robinhood, 85 Willow Road, Menlo Park, CA 94025.© 2024 Robinhood. All rights reserved.