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When talking about retirement and helping ensure you are financially secure in your later years, Individual Retirement Arrangements (IRAs) are a great way to prepare for the future. Simply put, IRAs allow you to make tax-deferred investments to provide financial security when you are ready to retire.
Typically retirement investments are available through employers in 401(k) programs or IRAs through banks or brokerage firms. 401(k) accounts feature automatic contributions for retirement funds that are initiated with an employer and the employer sometimes provides a match. A match is an additional contribution made by an employer on top of what the employee puts into the program. IRAs are more personalized and unique. IRAs are initiated by an individual and most IRAs do not offer a match. Two options for IRAs are a traditional IRA and a Roth IRA.
A traditional IRA means that contributions may be tax-deductible. Withdrawals are taxed at your tax rate when you retire. In other words, with traditional IRAs, you may not pay taxes on your earnings or contributions until you have started taking minimum distributions at age 73. The 2023 limit for traditional IRA investment is $6,500, for those under the age of 50". Deductibility of contributions is contingent on a number of factors, such as whether you have access to an employer retirement plan, and income level.
Contributions to a Roth IRA are not tax-deductible but eligible withdrawals, including capital gains, are tax-free. The benefit of a Roth IRA is that since youre contributing after-tax dollars, eligible withdrawals are not taxed in retirement. For 2023, the total contribution also cannot be more than $6,500 for those under the age of 50.
Hypothetically, if you needed to dip into your IRA accounts before retirement there are some things to consider. With Roth IRA accounts, if youre under 59 1/2, you are subject to taxes and penalties on the earnings portion of the withdrawal. There is also a five-year holding period requirement. For traditional IRA contributions, if you withdraw before age 59 1/2, you are subjected to a 10% federal penalty tax plus regular income tax.
One major benefit of an IRA is that you have the freedom to select from thousands of investment options.Robinhood Offers A 1% Match Retirement Plan With No Employer Needed
Robinhood Financial LLC. HOOD has the only IRA with a 1% match that requires no employer. Both traditional and Roth IRAs are available.
With Robinhood, individuals no longer have to be tied to an employer to get a contribution match for a retirement fund. This can be helpful for both self-employed individuals or people who work for employers that do not offer 401(K) programs. Robinhoods IRA is also great for anyone who wants another separate option from their employer and greater control over their investment.Key Features Robinhood matches 1% on every eligible dollar contributed up to the annual contribution limits. Limitations apply, see restrictions below.* Robinhood provides a one-time custom recommended portfolio, if you need help getting started, or you can build your own or even do a bit of both. Custom ETF portfolio recommendations are based on a series of questions that analyze appetite for risk and desired age for retirement.
The platform offers the ability to trade certain options strategies for eligible users without commission or per-contract fees** in your IRA. Depending on the account type, any potential retirement earnings have tax-deferred or tax-free growth potential
The addition of Robinhood Retirement to the platform can be a valuable tool to help build toward retirement. Robinhood aims to empower investors everywhere, no matter their investment level, with retirement account offerings that help build toward a more solid financial future.
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*You must have earned (wage) income in order to contribute to an IRA. The ongoing 1% match is only applicable to annual contributions made to the IRA from an external source, up to the applicable IRS limits. Contributions must come from an external account and must be held in the Robinhood IRA for at least five years to avoid the possibility of a withdrawal fee. See the Match FAQ for more information: https://robinhood.com/us/en/support/articles/ira-match-faq/ **Other fees may apply. View Robinhood Financials fee schedule at rbhnhd.co/fees.
Funds being contributed into or distributed from retirement accounts may entail tax consequences. Contributions are limited and withdrawals before age 59 1/2 may be subject to a penalty tax. Robinhood does not provide tax advice; please consult with a tax adviser if you have questions.
The Robinhood IRA is available to any customer with a Robinhood brokerage account in good standing.
Options trading entails significant risk and is not appropriate for all investors. Customers must read and understand the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Customers should consider their investment objectives and risks carefully before investing in options. Supporting documentation for any claims, if applicable, will be furnished upon request.
All investments involve risk and loss of principal is possible. Robinhood Financial LLC (member SIPC), is a registered broker-dealer.