The stock trading app Robinhood is once again looking to spur sign-ups for its Robinhood Gold service. While the app itself is free, Gold comes at a cost of $5. However, this membership tier has steadily been gaining benefits in recent months. Now, the newest power of Robinhood Gold is the ability to earn a 3% IRA Match.
Just as it sounds, Robinhood Gold members can now earn a bonus 3% on funds they contribute to their Robinhood IRA or Roth IRA. For example, Gold customers who contribute $1,000 can instantly earn an additional $30. This tops the 1% IRA Match that all Robinhood users can take advantage of. Also of note, the app states that these bonuses qualify as interest and, thus, do not count toward the annual IRA contribution limit.
Of course, like the core IRA Match feature, there are some rules to this 3% offer. First, in order to retain the full bonus, customers must keep their contributed funds in their IRA for at least 5 years. Those who withdraw eligible funds before that may be subject to fees that will essentially erase the bonus they initially received. Furthermore, customers who earn the 3% match will need to retain their Robinhood Gold membership for at least one year in order to keep the bonus 2% (since 1% is the base and the Gold bonus is really 2%). Those who cancel before this cutoff will forfeit that portion of their bonus. Finally, while regular contributions are eligible for the 3%, all IRA transfers and 401(k) rollovers will continue to earn the regular 1% Match rate.
Running the numbers, this offer alone could be a money-maker for some users. Those who max out their IRA contributions in 2023 — set at $6,500 this year — would earn a total of $195 in matching funds. Subtracting the 1% match ($65) that customers without Gold already earn and the $60 a year you’d pay in Gold membership fees, that still leaves a profit of $70. Actually, since you get the first month of Gold free, it’s really a $55 fee for $75 profit the first year.
That said, there are other benefits to Robinhood Gold as well. For one, those with Gold can currently earn 4.9% APY on their uninvested funds as part of the app’s FDIC-insured cash sweeps program. Additionally, the account offers between $5,000 and $50,000 in instant deposit access versus the regular $1,000. Gold members also get a discount on margin trading and more.
As I said, those who plan on maxing out or nearly maxing out their Robinhood IRA contributions may want to take a closer look at Robinhood Gold following this latest update. In fact, I’d say this is probably the platform’s strongest pitch yet for an upgrade that seemed pretty niche up until recently. Now we just have to hope that, as the app adds features, it doesn’t then hike the price of Gold — but we’ll just need to wait and see on that one.