Robinhood 3% IRA Match: Gimmick or Gold Mine?
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- Опубликовано: 2 июн 2024
- Robinhood is promoting up to a 3% match on IRA contributions, and for a limited time, a 3% match on IRA transfers. A viewer asked me if I thought this was a good deal. In this video I'll share my thoughts on the program, some of the things to look out for, and why I ultimately decided not to transfer my IRAs to Robinhood.
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While still working as a trial attorney in the securities field, I started writing about personal finance and investing In 2007. In 2013 I started the Doughroller Money Podcast, which has been downloaded millions of times. Today I'm the Deputy Editor of Forbes Advisor, managing a growing team of editors and writers that produce content to help readers make the most of their money.
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You mentioned a Trust in this video. That's a topic I'd love to hear you talk about sometime. Thanks Rob.
Apparently you also cannot transfer an IRA that is currently IN a trust.
Great video! 39yo here. I took advantage of the 3% match for transferring over a Roth IRA from Vanguard that I will not need access to for well over 5 years. It's invested in a four-fund portfolio and I'll use the account to do Roth backdoor conversions every year with it. In my particular case, it made sense--I got a few thousand bucks for free, can keep using the account as I intend, etc. But of course, each individual will need to consider their particular scenario.
Robs point wasn't investments but estate planning. Don't be one minute late.
@@gg80108your response makes 0 sense. Try to keep up.
@@gg80108 @tmh44 was sharing their experiences, not responding directly to Rob's specific point about estate planning.
Thanks for the reply. I am in a similar situation and thinking very seriously about doing the same as you.
@tmh44.. qq.. when u do backdoor .. are you gonna convert Ira match as well ? In that case you need to pay tax on the match right? Else if you get the match in the Roth directly after the conversion then you don’t need to pay tax for the match amount ? Please let me know
I moved 222k over to a Robinhood IRA and got the $6,600.
Easy money plus it’s just the best platform
What brokerage/platform did you move from?
@@drewr9580 It's definitely NOT the best platform. Thinkorswim is by far the best platform (now owned by Charles Schwab). Robinhood is used by 20 year olds to punt away their money gambling.
Finally SOMEONE who can actually answer questions without creating even more questions, THANK YOU sir.
This is truly valuable information. I truly appreciate your channel. Long time viewer.
Hi Rob. I am a young professional that recently moved to Columbus, For my first job since graduating school. Your videos have helped me get a grip on how to set myself up for success, and start saving early. The buckeyes are playing my alma mater at the shoe this fall.
Keep the videos coming.
This was such a great, informative video. The title made me nervous thinking I missed something in this deal from my research. But my understanding was correct and luckily the reason for you canceling won’t effect my decision just hope the transfer goes smoothly
Thank you very much for this! I am actually doing the gold 3% match with Robinhood. I have been slowly incrementally transferring out of Fidelity into Robinhood. All the way I’m monitoring if I have been getting the match and yes I am indeed. I’m not near the time of taking RMDs so those things you mentioned weren’t disqualifying for me. But I wanted to hear everything you had to say before finalizing the decision. Thank you again!
Thank you very much for this video for breaking down all the terms and conditions. I saw the ad and I have been seriously considering it. It was too good to be true at first glance.
Don't do it
@@TheMunib215
Don’t tell others what to do.
@@TheMunib215 why?
Great research Rob!
Thank you Rob for doing the homework for us. We greatly appreciate it!
We hope your back feels better. I'm assuming that's why you might be standing.
Best regards from Florida!
PS, dropping $2 million into that account would be an instant $60,000 return. That's appealing.
Your only insured up to $500,000 with SIPC if Robinhood folds
Didn't even know you had a RUclips channel Rob. I've listened to pretty much every episode of your podcast I did not pay any attention to whose video I was clicking on but as soon as I heard that voice I knew who it was
Interested in an update on contingent beneficiaries. Thanks Rob.
Sounds like they're hurting for liquidity. I don't trust Robinhood will be around in five plus years. When they eventually fold I don't want to deal with the stress of recovering my investments.
That is what is stopping me, but hard to pass up on 20k of free money if I do a rollover
what stops me a lot is just inertia. i'm currently with chase and its nice i have two rewards cards (one is the amazon 5% back card), savings, checking, and now they even have a barebones investing service. So thats 5 accounts I can look at on one screen, transfer money between checking and savings instantly, etc. it's hard to overcome that ease of use.
"Sounds like they're hurting for liquidity. I don't trust Robinhood will be around in five plus years. When they eventually fold I don't want to deal with the stress of recovering my investments." @josephdickson 3/28/2024
Good points caveat emptor😳
This, they are hurting for liquidity hard, that's why they are advertising so much. These guys are scum, they were the ones halting orders during the gamestop fiasco.
Great overview, Rob!
Not being able to name a trust as a beneficiary is a deal killer. Robbinhood needs to offer that!
Wow I've got almost 20% of my estate spread out between those apps, Treasury Direct and online HYSA - never thought about putting a bene on them. Won't my will would take care of all that?
@@ATHJD07Putting a beneficiary on an account lets the funds transfer to the beneficiary without going through probate. A will requires probate.
@@ATHJD07my understanding is it makes the whole inheritance process so much easier for heirs if you have the designated beneficiary (ies) named within the account itself.
@@CapCityDC Thanks but I don't know them well enough to ask for their SSNs. Going to have to do it the hard way - will and probate.
I agree. Any of us who are high net worth are going to want that. Isn't that the sort of customer they want?
Thanks for the information.
@Rob You standing had me take a second look. Did you update your desk?
*Quick Survey:* For your shared investing ideas, what do you think will be the next Apple/Microsoft in terms of growth?
Scammers are scamming
Nvidia. Gonna be much bigger
@@_QWERTY__ 😆
smart review. thx!
Stand up Rob! Hope you’re back is getting better.
Slow, but getting a bit better each day!
@@rob_bergerYeesh, I got sciatica this month after my back went out. Must be something in the air!
Hey Rob, have u started any type of P.T. exercises? Just wondering because I have recently injured my back as well....
Thanks for this video! Exactly what I was looking for.
Just what I was looking for after hearing about the Robinhood offer.
I was ready to move $2mm over to RH until you got to the family trust contingent limitation! Great video.
You can always withdraw it in 5 years.
@@McBigFisher Sure, but you never know what will happen. If something happens to him, his family is in a pickle.
Make sure to not opt into their stock lending program in your brokerage account and IRAs. It's checked on by default.
Also, check your privacy settings.
Or just don’t do business with grifters
@@newagain9964 I hear you. That's certainly a valid point of view. I think it's a question of degrees. Some people consider all equity investing to be working with grifters too. We have to all draw that line for ourselves.
Why not?
Like the comment above me asked, why not? What does that affect?
Why not?
Excelent video. I thought it was very fair, and informative. 1 other feature that would be nice imo, is for Robinhood to have a portal for finacial advisor or money managers for people who use those services. Given the match, it could be a great tool even for totally passive, hand-off investors, which is a huge section of the current adult population.
Wow, thanks for the info
Thank you the info I was just about to do the same sneaky Robinhood good thing I didn’t
In fairness I asked this question weeks ago in a live webcast. Glad to see a fuller response here, thanks!
@robberger Please do a follow-up on this after you've spoken with your estate/trust expert. I do understand my situation will be different, but it could help me decide whether to dig in further for me. Thanks Rob!
Great vid. Very informative. I'm gonna stick with Vanguard.
Great video Rob. I wish you had mentioned whether the match applies to 401k rollovers or not. I will dig myself.
I believe it does but only for a limited time.
Yes, until 30th April.
Regarding naming your Trust as a beneficiary of an IRA other qualified accounts, I though that distributions from an IRA to a Trust could be subject to very high tax rates under Secure 2.0 Act as opposed to naming spouse or another person as beneficiary or contingent beneficiary. Any thoughts on this?
Rob, an unrelated question: When using the Guyton and Klinger "guardrails" method, how does one calculate the amount that the equities portion of the portfolio has gone up each year (so knowing how much to move to cash)? We have *many* separate index funds, plus some are blended...so it's not at all easy to figure out how much growth happened during a year. Is there an app that will total by asset class (like Empower) AND you can look back historically to check the value of all stocks on your given snapshot date? Or are you just doing it "by hand"?
I got to believe that contingent beneficiarys is easier for them then dealing with probate court. Seems like all the online newcomers banks, brokerages don't care about simple estate planning. Of course Treasury Direct at least allow a trust.
They just don't want any old money.
I would have never thought Rob would use Robinhood lol
I don't trust Robinhood. 🤮
He sacrifices so much for us.
Bruh: Rob.... Robinhood.... his name is on it! You can't stop this kind of cosmic-onomastic alignment!
He said he only uses it for the high-yield savings account so he's not really using it for their main services
Their offerings are getting kind of hard to ignore. I’ve got to admit.
I just transferred 160k and got 5k ❤
I did this last year when my employer sold business and I had to move my 401k so I moved RH IRA, got my 3%, not worry about moving it or min distribution. I also can trade in the IRA👍
Good video, thank you
IIRC, it only took me about 5 minutes to make an IRA at Schwab a few years ago. Then about 3 hours of waiting for whatever it is they were doing for 3 hours.
Great video. I was considering this move as well. Regarding the gold fee....if i open a brokerage, roth and traditional ira, is it 150/year or $50/year?
I have all three, and I'm only charged $5/month.
60 a year for everything
fantastic review, curious if you caught the 1% match on all brokerage deposits with no cap. that's a huge benefit in my opinion
To my knowledge, the 1% match isn't on the brokerage acct but the retirement accounts if you don't have gold.
@ericwinter4513 its upcoming for the brokerage account itself.
@@KL-ii6dt Wow!
It seems to me that because Robinhood is so popular among young people, who have way less wealth and beneficieries to transfer money to, they just didn't prioritize those features all that strongly. I'm a 26 barely getting started, so that happens not to be a very big deal for me, so this video was very helpful.
Rob! I love this video, it spared me a lot of time. I'm considering rolling an old Traditional 401(k) from former employer to a Roth IRA. Do you happen to know if the 3% match from Robinhood applies to opening Roth IRA, or just Traditional IRA?
Also, please let me know what you decide to do upon discussing with your estate planning attorney.
I think it applies to either IRA type.
Good tips and info. Does the match count for ROTH accounts?
@Rob , another catch I learnt today is the cash you are holding in IRA doesn't generate any interest. 5.25% API for cash is only for brokerage account.. Moreover, in IRA they don't allow money market fund investment. Your only option is to invest in ETF.
The cash they give you in ira doesn't earn interest but can be used to invest.
Easy solution is buy SGOV ETF which is short term treasuries yielding over 5%
Why would you have cash in your IRA? Seems like a waste
I might have missed it, but does this offer apply to both Roth IRAs and Traditional? Or just Traditional?
Both
It's super useful to know that the bonus you earn on the backdoor Roth will be taxed (on the conversion). I think the 3% match on conversion to Robinhood is worth it, but for trying to backdoor it with gold, I'm not sure if that's worth the hassle.
For some reason it feels like you may be a better candidate for something like an M1. I believe they also do incentives for rollovers, though I don’t know exactly how they work.
But M1 bonus is a lot smaller. $100K gets $250, not $3000
I would never trust RH customer service for anything. Use a real financial institution for IRAs
This is amazing, I’ve got $1 million in my IRA, I’m sorely tempted to give this a try.
Only $500,000 of that is insured if Robinhood folds. SIPC insurance.
@@Cdix Well, I would be holding shares of companies in the IRA. I can't imagine a scenario in which Robin Hood went bankrupt and somehow took my ownership of MSFT and SCHD with them.
@@peterpayne2219 You never really own your shares, the brokerage holds them on your behalf in street name. Hence why there is such thing as SIPC insurance that applies to securities
@@peterpayne2219 I think you are right. He has done a video on what happens to your stock if the brokerage folds. It all should just transfer to the next brokerage.
I procrastinated watching this video and now I'm sad because I missed the transfer deadline.
Mr. Bogle didn't like "gimmicks" especially those that use current client's money (via higher expenses or expense ratios?) to bring in new customers at the expense of existing customers. "Marketing" is it for the benefit of the manager or is it for the benefit of the customer base?
Do you know if I would need a RH GOLD subscription for for my IRA and my ROTH IRA if I transfer both accounts? Or does one annual subscription cover both accounts? Thx for this informative video! Keep them coming!
The Robinhood Gold is on your overall Robinhood user account. Each Roth IRA/brokerage account is part of the overall Robinhood ussr account.
Can Will be a work around (but additional cost)
once again, your videos are the best! quick question... do you have a recent video on M1 and alternative to M1. Keep up the great wise sage investment advice!! ~Svend
Interesting (no pun intended) that they're able to call the match "interest". I wonder if some brokerage could set up something like this to get around contributions limits. E.g. I join the "super platinum tier" of my brokerage for $10,000 a year, and in exchange, I get a $10,000 "interest" payment in my account.
Was thinking the same thing!
When Fidelity had the $100 bonus for opening an account it was not counted toward the IRS limit. So I effectively had $6600 last year in my Roth IRA
No, you can’t set up some “interest transfer” deposit method. That would be akin to money laundering.
The match is separate from your personal contribution, treated as interest, not against your contribution limit.
Rolling over other accounts will not count against your contribution limits either. Neither the 1% basic, nor the 3% RH Gold match, will count against.
I don’t think you can pay $10
It is standard. Cash bonus are classified as interest at other brokers as well
Wonder if they can raise price of gold level during the 5 year period.
You only need to stay in the gold plan for one year after you receive the bonus.
Actually, I would be surprised if they don't raise it after a year of luring people in.
What of the reverse of the scenario you presented: you transfer, the market goes up. You take money out. The market goes down so you're below your original transfer. Do you have to pay it back then?
3% cashback on all purchases? Thats crazy.
Not at all 😅
@@Playingwithproxies anything above 2% flat cashback gets into unsustainable territory. Name another card that has a flat 3% cashback on all purchases. Not rotating based on categories.
Hi Rob, does transferring a roth ira count towards the match? Or is this only for traditional IRAs?
Both, I just did with Roth last month.
I honestly just love Robinhood. Years of using different services, and they just do things so easy. I find myself moving more and more things to it as time goes by.
Does it have to be an old IRA, can i just open an new IRA and still get the 3% match?
Hmm. I am very happy with Vanguard. But 3% to transfer can be a nice incentive. I have a 3 fund portfolio - VTSAX, VBTLX, VTIAX. I guess I could just get the ETF equivalents at Robinhood, and looks like $0 trade fees. I'm not set to retire for 10 years, so keeping it there for 5 shouldn't be an issue. Hmm...
I heard you can get a 4.5% match at Webull if you refer someone else at the same time
Hope u r not considering everything. These r very new brokerages when compared to Vanguard. Personally I would not trust any of them that much.
Just an FYI: I attempted to transfer my ROTH IRA over from Merrill Edge & it only took certain assets, I had to liquidate a handful of positions & move the money over instead of my stock holdings. This was probably for the best as I had a few dog positions that I needed to get out of anyways & I’m up around 50% since doing so.
So you used Robinhood prior?
Big problem if you have to blow out CDs with wide bid-ask.
Hi Rob, I became a Robinhood Gold member recently, just to take advantage of the 3% IRA match. I'm currently w Schwab SWVXX. if I transfer that into robin hood, will that get me the3% on the total? thanks for all the info - you're great!
Yes it will. I did it already
I'm curious if the credit card points can be redeemed into a Roth IRA. I wonder if they will be counted towards the annual contribution limits. I know it is a gray zone with redeeming Amex points via Schwab into Roth IRAs.
@Whaspme00 what
Is this 3% a one time deal, or is the 3% match like a 3% APY where you earn 3% interest?
Rob Berger, you mentioned in another video that you opened the Robinhood account and got the 3%. Would you consider making a updated Robinhood 3% video?
@rob berger I've been looking at this too. I didn't get to the point of calling RH with questions, but I recall seeing something about a requirement to be working and continuing to contribute. I'm early retired, so that's what stopped me. It was a little unclear if that was really a requirement and I was also wondering how they would know or enforce it. Also... not sure I trust RH, even if they are giving me 3%. I am close to wanting to take RMDs from my IRA, but I think I can make it 5 years without touching that money. So the offer is compelling. I also saw the 3% cash back credit card. RH is definitely being aggressive trying to grow their customers/AUM.
Correction: I just read the T&Cs and don't see anything about requirements to continue working/contribute. So that's not a requirement.
When i read the fine print it said they would claw back the match if the funds were converted to Roth after receiving the match in a traditional ira. If true, thats a deal killer for me as i plan to use roth conversions within 5 years to avoid longer term RMDs. Has anyone done a roth conversion and did they claw back the match?
Sofi gives a 2% Match. I don’t know if they are still offering that.
They advertise SIPC coverage only up to $500K. Is it possible to only roll a portion of an existing IRA over to stay under the coverage limit?
Yes. That’s pretty standard at all brokerages. It does NOT have to be all or nothing
Not exactly. Fidelity, for example, has additional "excess of SIPC insurance" that covers investments up to $1B.
@danh2716 Do u even remember what was ur question? Lolz He's answering ur question that all brokerages allow partial transfer.
@Sanloong7 My question started with the concern that they *only* have coverage up to $500K. I was commenting to clarify that this wasn't standard, as most reputable institutions have coverage beyond this.
I didn't comment on the rest because there was no need to.
Can you share what your lawyer says? I’m struggling with the decision as well…I am for the most part buy and hold with a large-ish account and ready to retire…it’s the interface I’m concerned about. Fidelity is awesome, but do I really need all that? My bonus would be ~32,000…is Fidelity worth that? Rhetorical…
Thanks for all you do!
Robinhood has a bad wrap of switching the rules once they get enough suckers?
Does the 3% match apply for beyond the 2023 IRA cycle? Or is the match only for the first contribution year?
Would you get the 3% credit card alone?
Would love for you to do a video on inherited IRA’s… the more videos I watch the more confuse I become, the IRS said you have 10 years to withdraw but do you have to take RMD’s? Especially if your parent was already taking RMD’s or can you wait until the 10th year???
You do have to take yearly RMDs since your parent already was. However, it is based on your life expectancy rather than that of your parent. If the RMD has not been taken in the year of death then you need to take it starting that year. If it has been taken then your RMD can begin the year following death.
Great analysis Rob. Keep up the good work.
Gold membership fees $50 per year: If we contribute max $8,000, the 3% of it is $240 which is more than $50. Isn’t it a win situation?
If we transfer $100,000 to RH IRA, the benefit is $3,000 per year for 5 years or more right? I mean, not only in the initial time when we do the transfer. Assuming the investment of $103,000 did good and it became $200,000 in the 2nd year. Will RH deposit 3% on total of $200,000 in the 2nd year or will it be on $197,000?
Should that money transferred be CASH only or it can be STOCKs too?
It's only 3% on the transferred cash/assets. It's vested over 5 years. So they will take it back if you remember that initial amount within 5 yr. I'm not sure what happens if you take profits, and only withdraw those profits. My guess is you only need to keep that initial balance, but thanks worth looking into.
As for transferring stocks, they do allow you to transfer any assets they support: stocks (including ETFs, but no OTCs), options, spreads, and cash. No fractional shares since those are handled differently at different companies.
@@Mathhead2000 oh...so it's 3% on cash transferred but not on the total value of portfolio transferred? Interesting.
@@kboy5189 I think they count both cash and securities (like stocks and ETFs), but I'd double check to make sure.
@@kboy5189it’s a flat one time deposit of 3% of the total value you transfer from another brokerage, regardless of whether they are in cash, stocks, ETFs, or mutual funds.
Seems like a Contingent Beneficiary is something that they would eventually add, so I'm not sure that's a deal breaker.
Am I wrong to worry about how they plan to make the money back? My understanding is that they sell the order flow? So I would have to go look at spreads across brokers to understand what it would cost me to buy things on their platform relative to another platform?
Great video. I dont have traditional IRA, all i have is ROTH IRA. Is the 3% top up available on ROTH IRA ? Please confirm, I would like to use this opportunity.
It should, however the 3% might count towards your contribution limits or be forced to be a normal IRA for tax reasons. Depends how they are doing it.
can you transfer a portion of an IRA? For example mutual funds but not annuities. What if some of funds are not available in Robinhood? Do they transfer over as cash?
They do allow a partial transfer, but they don't allow investing in mutual funds and bonds. You do have to sell them to cash first before you transfer.
i use robinhood and i just keep it there❤❤, as far as feedbacks they do listen to their customers
What if you have CDs in the IRA that gets rolled over? Robin Hood does not support CDs. What happens? How can you roll over securities that the new recipient brokerage does not support? Someone below said they might cause you to have to convert CDs to cash. Big problem given lack of liquidity in brokered CD market and you will get crushed on the bid/ask.
It won't let you rollover assets they don't support. In that case you can do a partial transfer if you wish
You either do a partial transfer or you need to liquidate the CDs then transfer
How could Robinhood afford to give 3% especially on huge ira's? They aren't that big.
Even for a detailed knowledgeable lawyer before agreeing diving into investing, so since I’m not savvy like you, I’m ok with zero % offer and can sleep better at night
Any updates? Only about a week left on the 3% deal
Just add the living trust as a beneficiary at .01% and your spouse at 99.99%. If both of you go at the same times. The trust getting 100%
That works only IF THEY ALLOW TRUST AS BENEFICARY, maybe re-watch the video?
Sorry, that won't work either (even if they allow a trust). For primary beneficiaries, you don't set the percentage... everyone gets an equal share. For example, list your spouse and 2 kids... they will get 33.33% each (no way to do 50%, 25%, 25%). Despite these short comings, specifically lack of contingent beneficiaries, I am rolling over an old 401k to them to get the match and my wife and I will be extra careful crossing intersections together the next 5 years.
What kind of security measures arw you taking when using Robinhood? VPN? viruse software? Anything you use would be a great help.
I don't access my account on a public network and use 2FA.
I'm turning 54 in a few days, so even if it takes 5 years, I can't take any money out anyways, right? I can't take anything out until 59 1/2 (without penalties).
So is this a good deal for someone in my situation?
It could be if you don’t want access to it for 5 years. Makes sense for people not in or close to retirement.
Correct. Plus, if your portfolio goes up 5 percent a year you can withdraw 5 percent without any Robin Hood clawback penalty.🎉
Does Merrill Lynch charge you on the backend for transferring your IRA?
Is Robinhood a safe place to invest money?
Never forget Robinhood’s reaction to GME
After the gamestop fiasco I wouldn't trust anything remotely connected to Robinhood.
Ok it’s missing a contingent beneficiary but would that be resolved through a will? Anyone in their 40’s+ with kids, grandkids etc should already have a will or trust to handle your assets after death. So this should not be a deal breaker, right?
Webull has a similar but much better program 4.5% match for 5 years lockup.
Nobody is answering this. Will robinhood do 3% on transfer amount and 3% on the contribution amount for the year with the gold membership?
So after 5 years, you're "invested" and not penalized?
Any comments on M1’s recent changes?
Do you pay taxes (1099-INT) on the 3% transfer match? The contribution match?
Also, does Robinhood allow automatic dividend reinvestments? (DRIP)
It's in an IRA, wouldn't be subject to tax