Robinhood does offer Roth IRA accounts

Yes. Robinhood launched its Roth IRA product in 2023 and currently allows you to open and fund a Roth IRA through their platform. You can hold stocks, ETFs, options, and crypto within the account, subject to the same contribution limits and tax rules that apply to Roth IRAs everywhere.

The account works like a standard Roth IRA from a tax perspective — contributions go in after-tax dollars, and may have access to withdrawals in retirement are tax-free. Robinhood does not charge an account maintenance fee, and there are no per-trade commissions. However, Robinhood's Roth IRA has specific features and constraints you should understand before opening one.

Key Takeaways

  • Robinhood's Roth IRA lets you invest in stocks, ETFs, options, and crypto, with no account fees or per-trade commissions.
  • You can only contribute money you earned as income in that tax year, up to the annual IRS limit (which varies by age and changes yearly).
  • Robinhood does not offer employer matching or rollovers from other retirement accounts, which limits its usefulness if you have an existing 401(k) or traditional IRA.
  • Withdrawals before age 59½ are subject to penalties unless you meet specific IRS exceptions, and earnings withdrawals are always taxed if taken early.
  • You must have earned income to contribute, and your ability to contribute phases out at higher income levels set by the IRS each year.

What you can and cannot invest in through Robinhood's Roth IRA

Robinhood allows you to buy individual stocks, exchange-traded funds (ETFs), options contracts, and cryptocurrency within the Roth IRA. This is broader than some other brokers offer — many traditional brokers restrict crypto inside retirement accounts entirely. You can also hold cash in the account and earn interest on uninvested balances.

You cannot use margin (borrowed money) in a Roth IRA, which is standard across all brokers. You also cannot short-sell or use certain advanced trading strategies. Robinhood does not offer mutual funds, bonds, or fractional shares of crypto in the Roth IRA, though you can buy fractional shares of stocks and ETFs.

Contribution limits and income restrictions

The annual contribution limit for a Roth IRA is set by the IRS and changes most years. For 2024, the limit is $7,000 per year if you are under 50, and $8,000 if you are 50 or older. You can only contribute money you actually earned as income — from a job, self-employment, or other work — in that same tax year.

The IRS also phases out your ability to contribute based on your modified adjusted gross income (MAGI). The income range where you can contribute phases out completely varies by filing status and changes annually. If your income exceeds the phase-out range, you cannot contribute to a Roth IRA at all that year, even if you have earned income. Robinhood will ask about your income when you open the account, but you are responsible for ensuring you stay within the limits.

How Robinhood's Roth IRA differs from other brokers

Robinhood's Roth IRA has no account maintenance fee and no minimum balance requirement, which makes it accessible to people starting small. Most other brokers charge similar or no fees, so this is not a major differentiator. The real difference is what you can hold: Robinhood's inclusion of crypto is unusual for a mainstream broker, and some people open the account specifically for that reason.

Robinhood does not accept rollovers from other retirement accounts — you cannot move money from a 401(k), traditional IRA, or SEP IRA into Robinhood's Roth IRA. If you have an existing retirement account elsewhere, you would need to keep it there or roll it to a broker that accepts rollovers. Robinhood also does not offer employer matching or profit-sharing plans, since it is a retail brokerage, not a workplace retirement plan provider.

Withdrawal rules and early withdrawal penalties

You can withdraw your contributions (the money you put in) from a Roth IRA at any time, tax-free and penalty-free. This is one of the main advantages of a Roth over a traditional IRA. However, if you withdraw the earnings (the investment gains), you face a 10% penalty plus income tax on those earnings unless you meet a specific IRS exception.

The main exceptions to the early withdrawal penalty are: you are 59½ or older, you are disabled, you are a first-time homebuyer (up to $10,000 lifetime), you have significant medical expenses, or you have unpaid medical insurance premiums while unemployed. Even with an exception, earnings withdrawals are still taxed as ordinary income. Robinhood will report any withdrawal to the IRS, and you are responsible for reporting it correctly on your tax return.

How to open a Roth IRA with Robinhood

You open a Robinhood Roth IRA through the Robinhood app or website. The process asks for your name, Social Security number, date of birth, address, and employment information. Robinhood will verify your identity and run a background check. You will also declare your filing status and estimated income so Robinhood can confirm you are within the IRS contribution limits.

Once approved, you can fund the account by linking a bank account or transferring money from another brokerage account. You cannot roll over a 401(k) or traditional IRA directly into Robinhood, as noted above. After funding, you can begin buying investments immediately. You can contribute up to the annual limit at any time during the tax year, and you have until the tax filing deadline (usually April 15 of the following year) to make contributions for the prior tax year.

Tax reporting and record-keeping

Robinhood sends you a year-end tax statement (Form 5498) that reports your contributions and account value. You do not receive a 1099 form for a Roth IRA because the account is tax-deferred — you do not owe taxes on gains inside the account. However, if you withdraw earnings before age 59½, you must report the withdrawal and the taxable portion on your tax return.

Keep your own records of contributions, especially if you contribute to multiple Roth IRAs or if you make non-deductible contributions to a traditional IRA in the same year. The IRS tracks total contributions across all your Roth IRAs, not per-broker, so if you have a Roth at Robinhood and another at a different broker, your combined contributions cannot exceed the annual limit. Robinhood's records alone will not show contributions made elsewhere.

Frequently Asked Questions

Can I transfer money from my 401(k) to a Robinhood Roth IRA?

Not directly. Robinhood does not accept rollovers from 401(k)s or other retirement accounts. You would need to roll the 401(k) to a broker that accepts rollovers, or keep it where it is. Some people do a "backdoor Roth" conversion by rolling a 401(k) to a traditional IRA first, then converting to Roth, but Robinhood does not participate in that process.

What happens if I contribute more than the annual limit?

The IRS charges a 6% excise tax on excess contributions each year they remain in the account. You can withdraw the excess and the earnings on it before your tax filing deadline to avoid the penalty, but you must report it. Robinhood does not monitor your total contributions across all accounts, so you are responsible for tracking the limit yourself.

Can I have a Roth IRA and a 401(k) at the same time?

Yes. You can contribute to both in the same year, though your ability to deduct 401(k) contributions may be limited if your income is high. The Roth IRA contribution limit is separate from the 401(k) limit. However, your income may phase you out of Roth contributions if you also have a 401(k) — the IRS rules are complex, and you should check with a tax professional.

Does Robinhood charge fees for buying and selling inside the Roth IRA?

No. Robinhood charges no per-trade commissions and no account maintenance fees for the Roth IRA. You pay no fees to buy or sell stocks, ETFs, or options. Crypto trades may have a small spread (the difference between buy and sell price), but there is no explicit fee.

Can I use options trading in my Robinhood Roth IRA?

Yes, if Robinhood approves you for options trading. You must request options access separately, and Robinhood will review your experience and account size. Options inside a Roth IRA are subject to the same rules as outside — you can lose money, and losses cannot be deducted from other income. The tax treatment is the same: gains are tax-free if withdrawn after age 59½.