How to Open an IRA on an Investing App, and What to Know About IRA Matches

Saving for retirement can feel like something only people with corporate jobs and generous 401(k) plans get to do well. But that's not true. An individual retirement account, or IRA, gives almost anyone with earned income access to powerful tax advantages, whether you're a freelancer, a part-time worker, a small business employee or someone who simply wants to save more than a workplace plan allows. And with investing apps, opening one now takes minutes rather than an afternoon of paperwork.

Some apps, including Robinhood, have also introduced IRA matches, adding a percentage of your contributions to your account. That can be a meaningful perk, but only if you understand the conditions that come with it.

The two main types of IRAs

The traditional IRA and the Roth IRA both help your money grow with tax advantages, but they work in opposite ways.

With a traditional IRA, your contributions may be tax-deductible in the year you make them, depending on your income and whether you or your spouse have a retirement plan at work. Your investments grow tax-deferred, meaning you don't pay tax on gains each year. When you withdraw the money in retirement, those withdrawals are generally taxed as ordinary income.

A Roth IRA flips that arrangement. You contribute money you've already paid tax on, so there's no deduction up front. But your investments grow tax-free, and qualified withdrawals in retirement, including all of the growth, are generally tax-free as well. Roth IRAs have income limits for contributing directly, so very high earners may not be eligible.

Which is better depends on your situation. Many younger people and those in lower tax brackets favor Roth IRAs, reasoning that paying tax now at a lower rate beats paying later at a possibly higher one. People in high tax brackets today may prefer the immediate deduction of a traditional IRA. Some people split their savings between both.

Rules every IRA shares

The IRS sets an annual limit on how much you can contribute to IRAs, with an additional catch-up amount for people 50 and older. You also generally need earned income to contribute. And IRAs are designed for retirement: withdrawing money before age 59½ can trigger income tax and a 10% penalty, though there are exceptions for certain situations. Roth IRAs have their own rules, including a five-year holding requirement for tax-free earnings. Because limits and rules change, check irs.gov for current details.

Opening an IRA on Robinhood

Robinhood offers both traditional and Roth IRAs. You can open one in the app, link a bank account and contribute either a lump sum or recurring amounts. From there, you choose your investments, such as ETFs or individual stocks. Robinhood has also offered managed options for people who would rather have their portfolio built and rebalanced for them.

What an IRA match is

An IRA match works much like the employer match many people get in a 401(k). When you contribute to your IRA, the provider adds a percentage of that contribution to your account. Robinhood has offered a match on eligible IRA contributions, with a higher match rate for members of its paid Robinhood Gold subscription. Matches have also been offered on transfers and rollovers from other retirement accounts at certain times.

Read the fine print before you count on a match

IRA matches can be genuinely valuable, but they come with conditions that are easy to overlook.

Holding requirements are the big one. Robinhood's match has required keeping the matched money in the account for a set number of years. Move or withdraw it too soon, and you may have to give the match back. If there's any chance you'll want to move your IRA elsewhere, factor that in.

Subscription costs matter too. Higher match rates have required a paid membership, so compare the subscription cost with the extra match you'd actually earn. If you contribute a small amount each year, the subscription might cost more than the additional match is worth. If you contribute the maximum, the math may work in your favor.

Eligibility can also be limited. A match may not apply to every account type, such as managed accounts, or to every kind of deposit. And because terms change, always check Robinhood's current IRA match terms rather than relying on what you've read elsewhere.

Choosing what to invest in

Opening an IRA is only half the job. The money needs to be invested to grow. Many retirement savers keep things simple with diversified, low-cost funds, such as broad stock market ETFs, sometimes combined with bond funds as retirement approaches. Your mix should match how far you are from retirement and how comfortable you are with market swings. Someone in their twenties can usually afford to take more risk for growth than someone a few years from retiring.

Don't skip your employer's match

If your job offers a 401(k) or similar plan with a matching contribution, many financial planners suggest contributing at least enough to get the full employer match first. Employer matches are often far larger than any app's IRA match, and leaving one on the table means turning down part of your pay. Once you've captured it, an IRA is an excellent place for additional savings.

The bottom line

An IRA is one of the most accessible, powerful retirement tools available, and investing apps have made getting started easier than ever. An IRA match can sweeten the deal, but treat it as a bonus rather than the main reason to choose a provider. Focus first on picking the right account type, contributing consistently and investing in a diversified way. Those habits matter far more over the long run.