Stock-Trading Platform Robinhood Launches IRA with 1% Match

Robinhood, which came to fame during the pandemic stock-trading boom, enters the retirement space via an IRA with an automatic 1% match.



Robinhood, which made its mark during the pandemic when retail investing in both
stocks and cryptocurrency was booming, has entered the retirement savings space with an individual retirement account offering a 1% match to whoever uses it for at least five years.

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Robinhood said in a blog post Tuesday that it opened a waitlist for Robinhood Retirement, a traditional or Roth IRA that would match 1% of every dollar contributed even if the investor does not have an employer. The commission-free online broker is positioning the product for gig workers or part-timers who do not have access to a workplace retirement plan.

“People are relying on themselves. They’re taking on gig work, side hustles and building their own companies,” Robinhood said in the post. “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.”

About six out of 10 households in the U.S. had some kind of retirement plan, as of mid-2021, according to the latest research from the Investment Company Institute. Of those who had plans, 37% owned an IRA or Roth IRA. Much of the growth in IRAs, however, comes from people rolling over savings from employer-sponsored plans, the ICI said, with 57% of traditional IRA-owning households indicating that their investment contained rollovers from employer-sponsored plans.

The current Internal Revenue Service cap on annual IRA contributions is $6,000 for taxpayers younger than 50; for those 50 or older, the cap is $7,000, though it will increase to $6,500 and $7,500, respectively, in 2023. Based on that maximum, people investing in Robinhood’s IRA could receive up to $60 from Robinhood in matching contributions for 2022. Matching funds do not vest to the account owner until they have kept funds in the account for at least five years.

Robinhood is entering the retirement space after seeing its seventh consecutive quarter with declining revenue in the third quarter of 2022 from its core business as an investing platform that also offers educational content and guidance.

The online broker is not charging a commission or custodial fee for the IRA investment. It will make money in the same way it does from its brokerage accounts, including margin interest, income generated from cash and offering its gold subscription, a spokesperson noted via email. The IRA plan might also be the first of future offerings in retirement, according to the company.

“We think this is a building block for other products down the road,” Sam Nordstrom, lead product manager for Robinhood Retirement, said via email.

“This product will provide a new, valuable touchpoint with customers looking to open a new retirement account, roll over an existing IRA or take their first steps in long-term investing.”

Customers using the Robinhood IRA can choose to invest in stocks and exchange-traded funds, both equities and fixed income, through either a traditional IRA or Roth IRA. They can customize their own portfolios or do so through Robinhood’s in-app recommendations.

The brokerage does not offer access to money market accounts, though the company is continuing to explore new assets to make available to customers, according to a spokesperson.

Investors who sign up for early access via Robinhood’s waitlist will be able to use the service on a rolling basis in coming weeks, the company said.

Congress Nears Passage of RILA Registration Legislation

The proposed legislation would greatly simplify the process by which the annuities are registered by providing for tailored registration forms.


The Senate passed the Registered Index-Linked Annuities Act yesterday by voice vote. The bill would direct the SEC to create a new registration form that is customized to the needs of RILAs.

Currently, RILAs must register under “catch all” forms, which are long and are intended primarily for initial security offerings. As such, these forms often require information that isn’t relevant to RILAs. The bill is intended to simplify and shorten the RILA registration process and increase their market supply.

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A RILA is an annuity product whose returns are linked to an index, but which contain upper and lower bounds that both insulate the participant from sharp market declines and also constrain upside potential in times of market growth.

The Senate version of the RILA Act was originally introduced in November 2021, and was sponsored by Senator Tina Smith, D-Minnesota. The Senate version contains minor definitional differences from the House version which do not affect the substance of the legislation. The House bill passed out of the House Financial Services Committee in July but has not yet received a floor vote.

When reached for comment, a spokesperson for Senator Smith’s office said, “the changes between the Senate and House version of the RILA Act were minor, non-controversial changes based on technical assistance received from agencies. While we don’t currently have any insight into the specifics of the path to passage in the House, Senator Smith is committed to working with her colleagues in the House to help get this bill across the finish line and signed into law.”

If the bill passes during the current Congress, which ends Jan. 3, the SEC would have 180 days to create a tailored form for RILAs, that would take into account the sophistication of people who purchase RILAs, the complexity of RILAs themselves, and the information available to issuers in determining what information to require.

The House version of the bill was initially proposed by Rep. Alma Adams, D-North Carolina, in July 2021. Adams’ office also did not return a request for comment.

The Insured Retirement Institute supported both versions of the bill. In July, after the Financial Services Committee passed the House version, the IRI said in a statement that demand for RILAs is growing aggressively, but the supply is curtailed by the onerous form requirements that would be greatly simplified by the RILA Act.

In an IRI press release sent by email today in response to the Senate version, the group wrote that the bill “would direct the SEC to promulgate a new form to replace the largely inapplicable forms annuity issuers currently are required to use when filing RILAs with the Commission.”

The IRI statement added, “the current forms used to file RILAs are ones designed for use in connection with Initial Public Offerings or other ‘catch-all’ forms not germane to insurance products.”

The IRI called on the House to pass the Senate’s version of the bill.

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