Personal Finance News

Robinhood Partners with Capitalize for IRA Rollover Feature

In January, the popular investment app Robinhood officially introduced its IRA program Robinhood Retirement. Now, ahead of this year’s tax deadline, the company has announced a partnership with Capitalize that will make it easier for customers to transfer their existing IRAs and 401(k)s over to the platform.

As a result of the partnership, Robinhood Retirement users will be able to find legacy 401(k) accounts and roll them over into a Robinhood IRA. Additionally, Robinhood Retirement will be featured on Capitalize’s IRA marketplace as a potential option for those looking to rollover their 401(k)s.

These types of rollover transactions are common when employees leave a job with an employer-sponsored 401(k) plan and want to take control of their investments. However, in other cases, employees may end up leaving their funds in their current plan because they don’t know of other options. In fact, according to a report from the Center for Retirement Research, there are now more than 24 million 401(k)s that are left with former employers, with the assets of these accounts totaling $1.35 trillion.

To celebrate the launch of the feature, for a limited time, Robinhood will offer its 1% IRA Match to those who make IRA or 401(k) rollover transfers. Customers can transfer any amount by April 18th, 2023 in order to earn an additional 1% of their funds. While there is no limit to the deposit amount eligible for this bonus, funds must be kept in the Robinhood IRA for at least 5 years in order for customers to keep the Match bonus. Funds transferred out early may be subject to a fee equal to the corresponding Match funds.

In a press release announcing the partnership with Capitalize, Robinhood Chief Brokerage Officer Steve Quirk said, “Since we launched Robinhood Retirement last year, we’ve seen close to half a million customers take advantage of our IRA, the only IRA in the market with a 1% annual match. This partnership will make it much simpler and easier for Americans to roll over their funds,” said Steve Quirk, Chief Brokerage Officer of Robinhood.”

Meanwhile, Capitalize CEO Gaurav Sharma stated, “Americans have traditionally found it very hard to track and consolidate their retirement savings given the archaic rollover process. Partners like Robinhood understand the hurdle this presents to growing wealth and want to help their users more effectively save for retirement,” adding, “We are grateful for the trust that Robinhood has put in our product and team.”

With this new partnership, it’s clear that Robinhood sees its Retirement platform as its next big expansion — especially as the crypto market continues to face woes. At the same time, this does also highlight a potential issue, which is that former employees may be leaving their retirement investments in accounts that aren’t as well suited for them as others may be. Ultimately, even if consumers don’t end up utilizing Capitalize or Robinhood Retirement, it might be worth looking at their current 401(k)s to see if a rollover may be in order.