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Written by Cari Scribner on July 15, 2021
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Acorns Later Investment Review 2023: Best Retirement Option?

Acorns is a robo-advising, micro-investing platform that does the saving and investing for you. It is very popular: Acorns has 8.2 million customers and $3 billion in assets under management at last count, and that number of users is growing at a fast-paced rate. It is a good starting point for new investors.

Acorns is basically micro-investing with micro-pricing. There are no deposit or account minimums to maintain, no commission fees and no penalties when withdrawing funds.

With a regular Acorns Invest account, you can round-up spare change and shop through partners for "found money" to fund your account. Acorns is designed as a system that helps you save, invest, earn and grow the most efficiently when you use all of its automated tools together.

One of the features Acorns members love is Acorns Later. In this article, we provide a full Acorns Later review.

This article is sponsored by Acorns.

What is Acorns Later?

Acorns Later is feature offered to account holders that allows them to take advantage of an IRA. There are both traditional and Roth IRAs. Acorns experts will recommend an IRA for you based on your goals, employment and income, then keep you posted on a regular basis so you know how it’s performing. IRAs allow you to save money without all the tax implications of other investments.

How Much Does Acorns Cost?

Acorns charges $1 per month for its basic service, Acorns Lite, $3 for its intermediate tier, Acorns Personal, and $5 for its highest tier, Acorns Family. The upper two tiers, Personal and Family, include Acorns Later, which is the name they use for Individual Retirement Accounts (IRAs).

If you’re a new customer, it might make the most sense to sign up for the app’s most popular subscription tier, Acorns Personal, which is $3 per month. This level includes Acorns Invest, Later, and Spend.

How much does Acorns Later cost?

The Acorns Later account is part of the Acorns Personal tier at the cost of $3 per month. When you sign up or upgrade your account, you will be able to set up the Later account if you are on a tier that offers it, which are the top two tiers.

How Much Money Do I Need To Open An Acorns Later Account?

Just as with Acorns investment accounts, you can open an Acorns Later account with just $5.

How Do I Set Up My Portfolio?

If you’re new to investing or setting up an IRA for the first time, you might experience some level of stress when it comes to how to build your portfolio.

You will not have these worries when you open an Acorns Later IRA, because they will automatically select the right plan for your lifestyle and goals.

More than 250,000 people have already signed on as Acorns Later investors. And if you already have an IRA or 401k, Acorns professionals will help you roll it over into Acorns Later. As you approach retirement, your investments will begin to shift to line up with your goals.

How Is My Portfolio Selected?

When you sign up for Acorns Later, you will answer a series of questions about your age, target retirement age, investing experience, risk tolerance, and other details about your money, lifestyle and retirement goals.

Acorns will select your portfolio based on your age and the time until you reach retirement age, which is currently 59 ½ years old according to the IRS. Over time, this calculation may change, so Acorns will automatically rebalance your investments.

For instance, as you grow closer to 59 ½ years old, and accessing your IRA funds is on the horizon, Acorns will direct your portfolio towards more conservative investments. This move is made to keep your money more protected and less volatile.

 How Do I Make Contributions?

There are two ways to contribute to your Acorns Later account. If you’d like to make a contribution, first make sure that your primary bank account, which is your funding source, is linked to your Acorns Later account.

Recurring contributions allow daily, weekly, and monthly schedules.
To set up a Recurring Contribution, follow these steps:

  1.  On your Acorns Later home screen, select 'Recurring'
    2. Choose the amount you want to contribute
    3. Choose the frequency — daily, weekly or monthly
    4. Confirm your contribution

One-time Contributions:

You can also make a One-Time Contribution anytime and from anywhere.

  1. On your Acorns Later home screen, select 'One-Time'
    2. Select the amount you wish to invest or press 'More Options'
    3. Confirm your contribution

Do I Have Access To My Money Before I Retire?

Acorns, as with other apps, lets you withdraw your money at any time. However, keep in mind that with any IRA, there are tax implications for early withdrawals or transfers before the age of retirement, which is currently 59 ½ years old. If you can, it is the best practice to keep your money invested for the long term in your IRA.

From the mobile app or website, navigate to your Acorns Later account and tap the Withdraw button to start the process. You'd need to state the reason for the early withdrawal. Acorns will use this explanation to categorize your withdrawal and report it back to the IRS.

When you withdraw from your Acorns Later account, you are most likely going to receive a 1099-R form from Acorns by the end of January of the following calendar year.

Are There Any Exceptions For Early Withdrawal?

There are tax implications (generally a 10% penalty and possibly income taxes and other penalties) for early withdrawals from an IRA, but sometimes the IRS will waive a tax penalty for early withdrawals. Some of these are listed below.

As always, before you make any moves with your money, talk to a tax specialist before making any decisions.

  • Qualified Reservist Distributions (QRDs) - These are for military members who were called into active duty from the reserves for over 180 days.
  • Disability - The IRS defines disability as “total and permanent disability of the IRA owner.” To qualify for this exemption, your condition must prevent you from working.
  • Death - If you are the beneficiary or trustee of an Acorns Later account, contact Acorns immediately and keep in  mind that legal documents may be required.
  • Education - IRA funds may sometimes be withdrawn without tax penalty for higher education expenses. Talk to a tax specialist about your options.
  • Medical - The IRS splits medical exemptions into two categories: unreimbursed medical expenses and medical insurance if you are unemployed.

 Can I Rollover My Existing IRA To Acorns Later?

Yes, you can. Rolling existing IRA plans over to Acorns Later is a good way to get the most out of the app’s portfolio allocations. It will help consolidate your investment accounts and potentially save you money on management fees.

Acorns Later Review: Final Thoughts

Acorn’s most outstanding and unique features are the micro-investing avenues. These include automatic round-ups to the nearest dollar on purchases you make with a linked debit card, and Acorns Earn, which is a long list of retail partners that will earmark an extra 5 to 10 percent of your transaction in cash back to your Acorns brokerage account.

Neither of these features are available when you open and maintain an Acorns Later IRA account. In order to build your account, you must set up recurring deposits or make one-time deposits. This means Acorns Later offers no special bells and whistles than other online investing apps with IRA accounts.

Acorns bills itself as “micro-investing at micro-prices,” and this is true for their regular portfolios, but not for retirement investing.

While the app is easy to use and aimed at new investors, its IRA offerings are lacking.

Article written by Cari Scribner

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