An individual retirement account (IRA) is a way to invest for the future with tax advantages. But time is running out to add money, as April 15 is typically the last day to make 2023 contributions.
For extra motivation, Robinhood offers up to a 3% retirement match for investors who contribute to an IRA and subscribe to Robinhood Gold.
IRA tax advantages
There are two common versions of IRAs with different tax advantages. A traditional IRA allows investors to contribute with pre-tax dollars. Basically, contributing to a traditional IRA could reduce how much someone owes for their 2023 taxes.
A Roth IRA does not provide an upfront tax deduction. However, once someone turns 59 ½, they can make tax-free qualified withdrawals from the account. They don’t owe income tax on their investment gains.
Both IRAs delay taxes on investment gains while the money is in the account. That’s unlike a regular brokerage account, where investors owe income tax on earnings each year, even if they reinvest everything. As a result, IRAs can create a better after-tax return when investing for retirement.
Robinhood offers both types of IRAs, so investors can pick their preferred tax setup. Robinhood IRAs have no account fees, no account minimums, and trades are commission-free (other fees may apply). Between these benefits and the matching funds, a Robinhood IRA could make sense.
Contribution restrictions
For the 2023 tax year, people could put up to $6,500 in an IRA if they are younger than 50 and up to $7,500 if they are 50 or older. Additional restrictions also apply to high-income investors and those with a workplace retirement plan.
The deadline for IRA contributions extends beyond the calendar year. Investors can make 2023 contributions up until their tax filing deadline. That’s April 15, 2024 for most people. However, those with a different tax filing deadline would have until then to make contributions.
Once the tax filing deadline has passed, the chance to make 2023 contributions is gone. If someone doesn’t max out in 2023, they can’t add more money in 2024 to make up the difference. The annual contribution limit still applies.
The Robinhood 3% retirement match
Robinhood is offering the biggest IRA match on the market.* Robinhood matches 3% whenever someone contributes to their IRA and subscribes to Robinhood Gold. The Robinhood match also applies to money transferred over from IRAs at other companies or an old 401k from a past job through April 30.
Robinhood Gold customers receive a 3% match. Other customers receive a 1% match. A Robinhood Gold customer who maxes out with $6,500 would receive an extra $195.
One downside to IRAs is that they do not include an employer match, like typically found on a 401k. The Robinhood IRA match can help independent workers who don’t have a workplace plan pursue their long-term goals.
3% match eligibility
To qualify for the 3% contribution match, an investor must have a Robinhood Gold account. They also must keep the Robinhood Gold account for at least a year and maintain the Robinhood IRA for at least five years to keep all the matching funds. Otherwise, Robinhood could deduct an Early IRA Match Removal Fee. Learn more with the IRA match FAQ.
The tax filing deadline is coming up quickly. Get started while there’s time through a Robinhood IRA with matching funds.
*Based on match dollars awarded to an IRA.
Disclaimer
A rollover is not your only option for an old 401(k). You generally have 4 options for what you can do with a 401(k) from a former employer. There are pros and cons to each that you should consider. This isn’t tax advice. Consult a tax professional to understand your unique situation. For more information, please visit Robinhood’s Help Center or FINRA’s site.
The 3% matching on contributions requires a subscription with Robinhood Gold (fees apply), must be subscribed to Gold for 1 year after your contribution to keep the full 3% match. You must have compensation (wage income) in order to contribute to an IRA. The funds that earned the match must be kept in the account for at least 5 years to avoid a potential Early IRA Match Removal Fee. For more information refer to the IRA Match FAQ.
3% match requires Robinhood Gold (subscription fee applies) for 1 yr from the date of first 3% match. Must keep Robinhood IRA for 5 years.
The 3% matching on transfers is subject to specific terms and conditions.
You must have compensation (wage income) in order to contribute to an IRA. 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. Robinhood does not provide tax advice; please consult with a tax adviser if you have questions.
The Robinhood IRA is available to any U.S. customer with a Robinhood brokerage account in good standing.
Limitations apply to both types of retirement accounts. Please refer to the IRS's IRA Deduction Limits for more information.
IRS contribution limits for 2023 are $6,500 ($7,500 if you're age 50 or older) annually. Visit the IRS site for more information.
This content was provided by Robinhood. Kiplinger is not affiliated with and does not endorse the company or products mentioned above.
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