Robinhood wants gig workers’ IRA business

investmentnews.com:

Robinhood is going after more IRA business, announcing a product Wednesday that’s aimed at gig workers.

The service, Robinhood Retirement For Independent Workers, will be offered to workers at Grubhub, Taskrabbit and Gopuff, although the fintech firm says it expects to expand the individual retirement account to other companies.

Like its existing IRA service, which is available to anyone, the new one includes a matching contribution made by Robinhood equal to 1 percent to 3 percent of an account holder’s contributions, which must be held for five years to avoid an early withdrawal fee.

But another part of the service is a hotline for financial counseling from GreenPath Financial Wellness. Robinhood noted that the service has “easy onboarding,” though it did not elaborate on how workers sign up or whether automatic paycheck deductions are part of the program.

“I think it’s a good idea,” said Andy Ives, IRA analyst at Ed Slott and Co. Although small business owners and gig workers already have options to save and invest for retirement, adding another one doesn’t hurt, Ives said.

“It’s another option that makes [retirement saving] available to people,” he said.

For many small-business owners, traditional or Roth IRAs are good choices, as people don’t plan to contribute more than the limit of $7,000 for 2024 or $8,000 for those age 50 and older, Ives noted.

For people who want to contribute a lot more, a SEP IRA is the best option, as it currently allows $69,000 per year, he said. If a self-employed business owner wants more flexibility, though, a solo 401(k) is another choice.

Further, Roth SEP IRAs are now an option, but businesses have struggled to implement them, Ives said. However, people could get around the