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Written by Krysten Zinon on February 14, 2023
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Robinhood Roth IRA Explained In 2023

Saving for retirement is an important part of financial planning, and individual retirement accounts (IRAs) are a popular way to do so.

One type of IRA is a Roth IRA, which allows investors to contribute after-tax money and potentially withdraw it tax-free in retirement.

In this article, we'll explore Robinhood Roth IRAs, including eligibility requirements and special features.

What Is A Roth IRA?

A Roth IRA is a type of individual retirement account that allows investors to contribute after-tax money and potentially withdraw it tax-free in retirement.

In 2023, the maximum contribution limit to a Roth IRA is $6,500, up from $6,000 in 2022.

The maximum modified adjusted gross income to be eligible for a Roth IRA in 2023 is $153,000 for single filers and $228,000 for joint filers, up from $144,000 for single filers and $214,000 for joint filers in 2022.

Roth vs Traditional IRA

Unlike traditional IRAs, which require you to pay taxes when you withdraw the money, Roth IRAs allow you to pay taxes on your income now, so in most cases, you can withdraw your money (and earnings) in retirement without paying additional taxes.

Roth IRAs can be beneficial for some retirement investors, especially those who expect to be in a higher tax bracket in the future.

The income and contribution limits for Roth IRAs change frequently, and people who are 50 or older can contribute more.

Robinhood is a financial institution that offers non-employer IRAs with a match on contributions, which is typically only available through employer-sponsored plans.

How To Open A Robinhood Roth IRA

There are two main requirements for setting up an IRA at Robinhood: Investors must have earned income and a Robinhood account.

The IRS allows only people with earned income to contribute to IRAs — that is, income from work, as opposed to passive income from investments or property.

You also need to be eligible for a regular, taxable Robinhood brokerage account to sign up for a Robinhood IRA.

That means you need to be at least 18 years old and a U.S. citizen, lawful resident or visa holder with a valid Social Security number, and a U.S. address.

What Accounts And Investments Are Offered?

Robinhood offers both Roth and Traditional IRA accounts. Customers can do both if they want to.

Robinhood IRAs support the full range of recognized contribution types including both deductible and non-deductible traditional IRA contributions, Roth contributions, and rollovers.

All of the stocks and exchange-traded funds (ETFs) available in a regular Robinhood account are also available in a Robinhood IRA.

However, options trading and cryptocurrency trading are not available in IRAs yet.

Robinhood plans to support options trading in IRAs in the future, but not cryptocurrency trading.

Conclusion

A Roth IRA can be a smart choice for many retirement investors, and Robinhood’s offering of non-employer IRAs with a matching contribution is a unique and exciting development.

However, it’s important to carefully consider your investment strategy, tax bracket, and long-term financial goals before opening a Roth IRA, or any retirement account.

Remember that investing always carries risk, and there is no guarantee of profit.

But with the right strategy and a long-term outlook, a Roth IRA could be a valuable part of your retirement portfolio.

This article was generated using automation technology, and thoroughly edited and fact-checked by an editor on our editorial staff.

Article written by Krysten Zinon

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