Robinhood Gold subscribers have the standard feature of a 3% match on all eligible annual IRA contributions. However, this bonus is somewhat limited as the annual IRA contribution limits are relatively low. 3% of $6,000 is $180, but Gold costs $60 a year. The primary benefit of Robinhood Gold is 5% interest on your cash sweep (otherwise it is only 1.5%). Here is their IRA match FAQ.
For a limited-time, Robinhood Gold has improved the offer to include a 3% match on IRA transfers and 401k/403b/457 account rollovers between January 17, 2024 and April 30, 2024, with no limit on the amount of match earned. You should open or have an open Traditional or Roth IRA (even if empty) with Robinhood and then transfer into the proper IRA container (pre-tax or Roth).
For folks with big IRAs or 401ks, this can be very significant bonus. A $100,000 IRA or 401k rollover would get you $3,000. $35,000 would get you over $1,000. $350,000 would get you over $10,000. Now that $60 a year for Robinhood Gold doesn’t seem as much of a hurdle!
The catch? You must keep the funds in your Robinhood IRA for at least 5 years to keep the match, and be a Robinhood Gold subscriber for 1 year after the first deposit that earns the 3% match. Details on the 3% limited-time offer here.
I’m certainly considering this offer, as I don’t think I’ve ever seen a bonus this large offered on a 401k rollover. However, I also think of Robinhood as amongst the “leanest” in customer service. I’ve done several ACAT transfers before, and they can spend a certain amount of time in “limbo” where your stocks have been taken out of the origination account, and hasn’t quite shown up in the destination account. It can be a bit nerve-wracking and I wouldn’t want to deal with Robinhood if something was lost in transit.
How long does it take for IRA transfers and 401(k) rollovers to complete?
For IRA transfers, after we receive an account transfer request, it typically takes 5-7 business days for the transfer to be completed in your Robinhood account. Check out Transfers and rollovers for more info. For 401(k) rollovers, this process can typically take 2-4 weeks for deposits to complete.When will I get the match?
We’ll deposit your earned match after the eligible contributions settle in your account. For transfers, you’ll get the match as soon as they settle. For rollovers, you’ll get the match upon settlement, which is typically within 5-7 business days of receipt.
Along those same lines, I’m also not sure I want to keep my IRA there for 5 years. Most other brokerage transfer offers don’t have such a long hold time requirement.
Either way, I hope the idea of paying for IRA transfers catches on with some other brokers. Brokers fighting for assets works out especially well if you are a buy-and-hold investor. Robinhood says that transfers and rollovers will still earn a 1% match after 4/30/24. That’s actually still pretty good historically.
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Trying to think – 401k rollover would generally be getting a check from your previous provider and then you deposit that into Robinhood. I don’t think your money will be in limbo.
However if you plan to do a backdoor Roth then it might best to keep money in 401k and not rollover into ira.
I’ve had a few 401k rollovers via paper check, but the last 401k rollover I did was a direct transfer, so I’m not sure if that is a more common practice these days. There were some delays as I had to fill out additional paperwork at the receiving company, otherwise they wouldn’t accept the transfer and were about to reject it.
5 years is a really tough pill to swallow. I’d be more tempted with 1-2, but 5 just feels too long to tie funds up (of course that ignores that the money sat in Vanguard for much longer than that so far).
But ultimately, if I chose to transfer out at some point, I’m losing only the match fee, so it would basically be as if I’d never done the deal (except I’ll keep the gains I do accrue on the match fee).
It’s a pretty strong deal and definitely tempting.
Tempting, but then I divided 3% by 5 years and that’s only 0.6% extra of interest per year which is much less so and would be similar to the interest offered in it sweep accounts by brokerage like Vanguard. And could potentially be lower if Robinhood decides to lower its percentage in relationship to other brokerages.
How does the sweep comparison come into play? This is extra money you can’t otherwise add to your IRA, and it wouldn’t be in sweep in your IRA. It’s also actually a bonus of 3% + gains on that 3% over the 5 years.
Even if Robinhood lowers the 3% (or 1% if not a “gold” member), that would be future contributions (the bonus is deposited as soon as the money clears transfer), and that’s still something on top of what Vanguard doesn’t offer.
Side note, the 1%/3% on future deposits also carries a rolling 5 year window. So transfer today, 3% on transfer requires you keep the money until 2029, contribute for 2025, and that 3%/1% is lost if you take the money out before 2030, and so on.
The idea of earning “just” 0.60% a year of guaranteed “alpha” above an S&P 500 index fund would have every single asset manager salivating. For a Boglehead that used to celebrate a few basis points of lower cost, 60 basis points for 5 years is a lot! 🙂
My other concern is the inability to buy (on secondary market) or hold individual TIPS in Robinhood (unlike at Vanguard or Fidelity).
I got burned by weak returns of TIPS ETFs before and since my main objective is capital preservation in real terms, it’s imperative for me to be able buy and hold individual TIPS to maturity.
This is a dream for bogleheads. I’ve made more money from ACATS transfers this year than I ever imagined.
How long would a transfer take is my question? If funds are in limbo for a few days in an up market you could lose a lot of that 3%.
Any real world data points on this? If I could do it in a direct transfer with just a day or two I will do it. Otherwise, no.
Thanks.
Do IRA cash also earn 5% APY? I am not clear based on their website if the 5% only limited to brokerage accounts or also applicable to retirement accounts?
How does it work if your income is above the allowed limit to contribute to a Roth IRA? Will you be penalized? I am thinking of transferring my Roth account for some extra cash because I can no longer contribute to it unless I use the backdoor option.
According to their FAQ, the match money does not count as a contribution from you, it is a growth in your investments.
This makes it a very attractive offer then.
In addition, it appears that the first $1,000 of margin is included with the gold subscription fee. One could transfer $2,000 for the margin requirement, invest the cash, and use the $1,000 to purchase SGOV. You would hold SGOV for a year while paying for Robinhood Gold, and the ETF would pay a good chunk of the annual fee.
Thanks Johnathan!
Using the free $1,000 of margin (w/ Gold) to grab extra interest with SGOV is an interesting idea, I like how you think!
Can I transfer a SEP IRA or would it have to be rolled over to a traditional IRA? Also, do Vanguard mutual funds have to be converted to ETFs first (like you mentioned in another post)?
Jonathan, did you end up doing this transfer? If you did, how long did the process take? Thanks!
I have not done the transfer. I don’t have a great rational reason why, I personally just don’t trust them 100% and I don’t like long-term lockups.
It’s a good deal numbers-wise, and I would understand others jumping on it, but I’m gonna pass.
I was most of the way through this process and realized one big pitfall- Robinhood does not allow minors or trusts as account beneficiaries. Only adults. I may do it anyway but this is an annoyance for sure. I’m not aware of any other brokerage that has this restriction
Good to know, thanks.