IRA Bonus Offers
There’s a battle brewing within the investment space. Brokers are fighting on your retirement dollars, offering you free money when you roll over your IRA to them.
Take investing app Webull’s IRA transfer bonus, for instance. Webull’s homepage explains how their IRA transfer offer currently works, with a current expiration date of May 31, 2024:
“Take advantage of Webull’s amazing offer, valid for a limited time only until May 31, 2024! Transfers from traditional IRAs, Roth IRAs, rollover IRAs, or 401(k)s. We charge 3.5% on all transfers and 3.5% on new contributions.”
Then there’s the IRA transfer bonus, available through the Robinhood investing app, which doubles 1% on IRA transfers for anyone who initiates one. The offer also grants 1% on recent funds added to a Robinhood IRA by regular investors, or 3% for members of the premium subscription service Robinhood Gold.
These bonuses seem to be a very good deal at first glance, especially for investors with large retirement account balances. For example, if you will have $300,000 in an IRA and also you transfer it to Webull now, you may get an IRA transfer bonus value $10,500 only for doing the legwork and ensuring the transfer goes through.
But in relation to IRA transfer bonuses, the devil is usually in the small print, and there is some positive print it is best to know before transferring your retirement money. If you are wondering what the catch is with IRA bonus offers available through apps like Robinhood and Webull, here’s a rundown of all the pieces you must know.
Pay attention to the small print
IRA bonus offers that reward retirement matching aren’t at all times as straightforward as they sound. For example, the corporate offering the bonus doesn’t mechanically deposit the cash you are owed into your recent account when you make the transfer. There’s often tons of positive print limiting how much of your bonus is paid out and when, and it may take as much as five years (or more) to get the total bonus you signed up for.
The Webull IRA transfer bonus is a chief example of this. This bonus is just valid for transfers of as much as $1 million, which is definitely quite generous. However, bonus funds are credited to customer accounts every May for a period of 5 years. So you’ll receive one-fifth of the bonus amount in May 2025 and the opposite installments will probably be paid out in May of 2026, 2027, 2028 and 2029.
If you choose to withdraw a number of the money out of your account before May 2029, you should have to follow much more rules. Because withdrawals from the retirement account reduce the quantity of the bonus offered, even when the cash has been within the account for years. Webull offers this instance within the positive print:
“Eligible customers make a qualifying deposit of $12,000 into their IRA account. Then, prior to the final bonus payment date, the eligible customer transfers $6,000 from their IRA account to a retirement account at another institution so that their IRA account contains $6,000 in eligible assets on the final bonus payment date. Eligible customers are only eligible for a 3.5% deposit bonus on $6,000.”
Robinhood also has its share of positive print inside its IRA match offer, which you’ll read in its Frequently Asked Questions about IRA Match. For example, it’s essential to keep the cash in your Robinhood IRA for a minimum of five years to maintain the grant you earned. If you are a Robinhood Gold member, it’s essential to maintain your subscription for a minimum of one 12 months from the date of your first 3% grant to maintain the extra 2% grant you earned on recent deposits into your account. You must also keep the account open for five years.
The excellent news concerning the Robinhood IRA match is the indisputable fact that you get it fairly quickly after you transfer your IRA to the app. This sets it other than the Webull offering, which offers the next match amount but pays out the bonus funds in five annual installments.
Further considerations
Mathematician and associate professor Michael Edesess says there’s at all times a catch with IRA transfer bonus offers. And the identical goes for similar bonus offers that promise bonus money for account transfers, bonus stocks or other free gifts.
“Webull and Robinhood are not loss-making organizations, and because of the zero-sum nature of this particular business relationship, their profits must necessarily be their customers’ losses,” he says.
Edesess says investing apps particularly encourage customers to interact in trading, versus the standard “buy and hold” strategies most investors use with their retirement accounts. And that trading might be funneled to brokers who can benefit from the trader, or it may end in trading fees or hidden costs. Fortunately, each Robinhood and Webull are known for his or her commission-free trading, although other fees and costs may apply.
For example, Robinhood’s positive print states that while the Financial Industry Regulatory Authority (FINRA) doesn’t charge commissions on trading, it does charge a transaction fee and a trading activity fee for sell orders.
“Investors should know that nothing is free in the investment sector,” says Edesess.
Asset manager Cliff Ambrose from Apex Assets also says that investors need to think about a variety of various factors before switching accounts based on promotional offers. This means you must educate yourself on the platform’s security measures, fee structure, and the range of investment options available.
“It is also important to understand the platform’s user interface and customer support, as these can significantly impact the investment experience, especially in volatile or uncertain market conditions,” he says.
Additionally, investors must be sure that the platform they’re considering is correctly regulated and offers adequate protection for his or her assets, corresponding to SIPC insurance within the U.S. Both Robinhood and Webull are members of the SIPC, which protects its members’ securities as much as $500,000 (with a $250,000 sub-limit for money).
The conclusion
Ultimately, IRA transfer bonuses might be quite rewarding. You just must be willing to beat some hurdles to get your bonus money, including maintaining your account and investing your money in a single place for a minimum of five years.
You must even be willing to place within the time and energy required to roll over your IRA (or other qualified account), and never everyone desires to undergo that hassle.
