Robinhood IRA Rollovers And Transfers Explained In 2023

Saving for retirement is a critical part of securing your future.

Robinhood, a popular investment app, provides its customers with Individual Retirement Accounts (IRAs) to help them save for retirement.

If you have existing retirement accounts, Robinhood allows you to move those funds to your Robinhood IRA through two options: rollovers and transfers.

In this article, we’ll take a closer look at Robinhood IRA rollover and transfer guidelines.

Transfers

A transfer is a non-taxable and non-reportable movement of funds between two retirement accounts of the same type.

For example, if you transfer funds from one traditional IRA to another traditional IRA, it doesn’t generate a tax form, and it’s not reported to the IRS.

To start a transfer, go to the app, select Retirement, go to Menu or Settings, select IRA Settings, go to Actions, and choose Transfer in an external IRA. Follow the prompts in the app to complete the transfer.

Eligible assets from your outside IRAs can be transferred into Robinhood through the Automated Customer Account Transfer Service (ACATS).

Robinhood will reimburse up to $75 for the IRA closing or transfer fee charged by the other brokerage, provided they receive proof of the charge.

Rollovers

A rollover is a transfer of retirement assets from an employer-sponsored retirement plan like a 401(k) to an IRA.

It’s reportable but non-taxable.

There are three options when you leave a company where you participated in their employer-sponsored retirement plan like a 401(k):

1. Leave your money in the plan.
2. Roll the assets into your new employer’s retirement plan (if they allow it).
3. Cash the plan out or roll over the assets to an IRA provider like Robinhood.

Robinhood offers two types of rollovers: direct and indirect.

Direct Rollover

A direct rollover is a movement of money from an employer-sponsored retirement plan where the funds are deposited directly into an IRA. As long as your employer plan provider sends the funds for deposit directly to your new traditional IRA provider, you don’t have to pay taxes on the movement.

To start a direct rollover, you need to set up or use the applicable IRA in Robinhood, then contact the plan admin of the 401(k) or other employer plan that you’re rolling over.

Request a direct rollover of the 401(k), ask what’s required for this direct rollover, and ask what details need to be on the check. Robinhood will supply you with all of the necessary information on their end.

After the check is deposited into your Robinhood account, Robinhood will notify you when the money is available to invest.

You can then choose your own investments, or if you’re unsure how to get started, check out Retirement recommendations.

Indirect Rollover

An indirect rollover, on the other hand, is a movement of money from an employer-sponsored retirement plan where the funds are made payable to you, and you take receipt of those funds in a non-retirement account before depositing them back into an IRA.

With this type of rollover, your plan admin will generally require 20% federal tax withholding on the movement, which will reduce the amount you receive in the end.

Final Thoughts

Remember to review the specific requirements and procedures carefully, and consult with a financial advisor if necessary.

By investing in a retirement plan like Robinhood IRA, you’ll be one step closer to achieving your retirement goals.

Don't forget to grab your free stock worth up to $200 from Robinhood today!