Investing
How to Transfer a Retirement Account to Robinhood Retirement
Earlier this month, as I prepared for my tax-time IRA contributions, I learned two things about my IRA situation. First, I discovered that one Traditional IRA I had changed my investments due to the discontinuation of one of its fund options. Second, I found out that Robinhood Retirement was offering a bonus for Robinhood Gold customers who transferred their IRAs to the platform. Needless to say, this provided to perfect opportunity to make a move — and learn how the process worked.
With that, let’s take a look at what you should know when moving an existing retirement account to Robinhood.
Transferring Your Retirement Account to Robinhood Retirement
Opening a Robinhood Retirement account
Before you can transfer your retirement account to Robinhood, you’ll of course need to open a Robinhood Retirement account. Currently, the platform offers both Traditional and Roth IRA options. Plus, opening an account is a pretty simple process. For more on how to get started with this, you can check out my full review of Robinhood Retirement.
Get a Free Share of Stock
Not a Robinhood user? If you haven’t signed up yet just click the button to create an account and get a free share of stock just for opening an account with this Fioney link.
Rolling over a 401(k) versus an IRA
With Robinhood Retirement, you can not only move a current IRA to a Robinhood one but can also roll over a 401(k) to an IRA. That said, the process for the latter can be a bit different.
When you select to roll over a 401(k), you can choose to have Robinhood help you through the process — a service they offer in partnership with Capitalize. This tool can even help you find where your old 401(k) is if you don’t know!
Should you choose to just do it yourself, Robinhood will provide you with some tips for how to request a transfer. But, that’s where this option ends. Because of this, if possible, I’d probably recommend going with the assisted option.
If you’re transferring a current IRA to a new Robinhood IRA, the process is a bit different and a bit easier. So, that’s what we’ll focus the rest of this article on.
What assets aren’t supported?
One potential downside of moving your account to Robinhood Retirement is that the platform doesn’t support certain assets and also doesn’t allow for a margin transfer. So, if your account contains any of the following, you may only be able to do a partial transfer:
- Mutual funds
- Bonds
- Margin balance
As for what is supported, most stocks, ETFs, cash balances, and certain options contracts can be moved over to your Robinhood Roth IRA or Traditional IRA without issue.
Selecting your brokerage
To get started with your transfer, you can select your current brokerage by either scrolling through some popular options or using the search tool. Once you find your provider, you can enter your brokerage account number.
If your brokerage isn’t listed
For those scrolling through the list of brokerages and not seeing their own — don’t panic! If this is the case, you may still be able to transfer your account. But, admittedly, it could take a bit more legwork.
First, you’ll need to find your brokerage’s DTC number. As Robinhood explains, this is a four-digit number used to help facilitate transfers between brokerages. However, it’s also not a number that every brokerage will readily broadcast.
In my experience, I wasn’t able to find the DTC number anywhere on my account. But, by doing some Googling, I was able to find a downloadable spreadsheet directory. Looking at this, I was able to find what I believed to be my brokerage’s number — and I later confirmed this to be the case when I had to call them.
On that note, you may still need to contact your old IRA or 401(k) provider to authorize the transfer.
Full transfer or partial transfer
Before you submit your transfer request, you do have the option to select between a full transfer or partial transfer. With the former being pretty self-explanatory, let’s talk about the latter.
When you select a partial transfer, you can enter the assets you want to transfer. To do this, you can not only enter the stocks/ETFs, cash balances, and options contracts you’d like to transfer but also state the exact amounts of each you’d like to move.
From what I can tell, Robinhood Retirement makes it pretty easy to specify what you want from your partial transfer. But, if you’re ready to just move it all, then a full transfer is certainly the simplest option.
My experience transferring to Robinhood (or “how to do an indirect rollover”)
Why I needed to go the ‘indirect’ route
Originally, I assumed I’d be able to just transfer my current IRA to Robinhood using the tools mentioned above. However, when I tried to submit a transfer request, it was quickly rejected. After talking to my current IRA brokerage, I found out what the issue was.
Knowing that Robinhood didn’t support mutual funds, I thought that I might be able to buy a different asset in my current IRA before moving over my holdings. Well, it turns out that this provider only supports mutual funds. Therefore, there wasn’t a direct way to make the transfer.
That’s where the indirect rollover comes into play. With this option, you can essentially take a distribution on your current IRA and have the funds deposited into a bank account (via ACH, in my case). Then, you have 60 days to deposit those funds into a different retirement account.
This 60-day window is important because if you miss the deadline your distribution will be counted as a withdrawl. If you’re under 59 1/2, this will not only mean paying taxes on these funds but also being hit with a 10% penalty. In other words, you really want to make sure you get the job done within that 60 day window.
Making the transfer
Once I determined I needed to do an indirect rollover, the process was fairly simple. In terms of my previous brokerage, I needed to request a distribution but adjusted the tax withholdings form to be 0%. These funds then arrived via ACH transfer within a few days.
When the funds cleared, I then went into the Retirement tab on my Robinhood app and tapped on the current offer (more on that in a moment). From there, I could select that it was an indirect rollover. Choosing this option did come with a warning about the previously discussed 60-day window, as well as the fact that this can only be done once per year.
After acknowledging the info in the pop-up, completing the indirect rollover was as simple as entering the amount I needed to transfer and the account where the funds were (which was already connected to Robinhood since it’s my main checking). Of course, I also needed to select whether this was for my Traditional or Roth IRA, since I have both on the platform.
With that, my transfer was underway. Although it can take a few days for your total transfer to complete, Robinhood did make $1,000 available right away.
Earning my bonus
There were a few reasons why I wanted to make this move to Robinhood. For one, my previous brokerage recently discontinued the target date fund and moved my funds to a money market account. Seeing as I didn’t really want to pay for their other mutual funds, I decided it was time to try something else. Luckily, this realization coincided with a special promotion from Robinhood.
At the time, the platform was offering a 3% Boost to Robinhood Gold members who made eligible retirement account transfers to the platform. Because of this, I was able to earn a $260 bonus just for moving my account. Plus, I can now invest my money in low-cost index funds rather than rely on whatever mutual funds my previous brokerage had available.
I should note that Robinhood Gold did cost me $50 for a year paid upfront. But, of course, this 3% bonus more than made up for that. Also, sadly, this particular promotion expired on April 30th — but it looks as though they offer 1% on transfers normally.
Robinhood Retirement does also offer a different boost year-round. Regular users can earn 1% on IRA contributions while Robinhood Gold members earn 3%. In order to earn the full bonus, you’ll need to keep your funds in the account for at least 5 years.
All things considered, moving my IRA to Robinhood was pretty easy — even if I did encounter a couple of hiccups. While some of these issues weren’t really on Robinhood’s end, the fact that the company doesn’t support mutual funds is a bit of a bummer and something that could prove a hindrance for others moving 401(k)s and IRAs to Robinhood Retirement. Thankfully, though, the indirect rollover worked out just fine and I was able to claim a $260 bonus in the process.
The bottom line is that, if you plan on moving an IRA to Robinhood, make sure you know what assets are supported ahead of time. Plus, if you’re not in a rush, you may want to wait for another transfer bonus offer and join Robinhood Gold in order to maximize your boost.
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