Robinhood Retirement Joins Forces with Capitalize to Simplify 401(k) Rollovers

Wednesday, 22/03/2023 | 13:32 GMT by Damian Chmiel
  • Due to the new partnership, Robinhood will be displayed on Capitalize's IRA marketplace.
  • According to Capitalize, $1.35 trillion worth of 401(k)s has been left with previous employers.
Robinhood

Robinhood Markets, Inc (NASDAQ:HOOD), the US commission-free trading app, has revealed a new alliance with Capitalize, the platform for rolling over retirement accounts. The new partnership is designed to assist customers in locating and transferring their existing 401(k)s into Robinhood's recently launched individual retirement accounts (IRA).

Robinhood Retirement Partners with Capitalize

The popular retail trading services provider introduced Robinhood Retirement last year but has already attracted nearly half a million customers to its IRA offering, which is unique due to its 1% annual match.

"This collaboration will significantly streamline and facilitate the process of rolling over funds for Americans," Steve Quirk, the Chief Brokerage Officer of Robinhood, commented.

As part of the agreement, Robinhood will be prominently displayed on Capitalize's IRA marketplace for users looking to merge their old 401(k) assets. To celebrate the partnership, Robinhood is offering an extra 1% on every dollar transferred from external retirement accounts until April 18.

A 401(k) plan represents a retirement savings program available to numerous American employees, providing tax benefits for those who save. The plan derives its name from a specific section within the US Internal Revenue Code (IRC).

Gaurav Sharma, the CEO of Capitalize, noted that the traditional difficulties Americans face in consolidating retirement savings are due to the outdated rollover process. "Partners like Robinhood recognize this obstacle to wealth accumulation and strive to help users save more effectively for retirement. We are grateful for the confidence Robinhood has placed in our product and team," Sharma said.

Capitalize's enterprise rollover solution, launched in 2021, has been adopted by an expanding roster of popular IRA providers. The solution, which combines proprietary technology and large-scale operations, enables customers to find and fund new or existing IRAs.

Annually, countless Americans either cash out their 401(k) accounts too early during a job transition or abandon them altogether. A study conducted by Capitalize and the Center for Retirement Research (CRR), titled 'The True Cost of Forgotten 401(k) Accounts', reveals that more than 24 million 401(k)s have been left with previous employers, amassing over $1.35 trillion in assets.

The ongoing challenge of locating and transferring these assets following an employment change remains a substantial obstacle in effectively accumulating retirement savings.

Robinhood Faces Falling User Base and Controversies

Robinhood's recent report shows that the monthly active users (MAU) base has contracted 31% year-over-year (YoY) from 17.3 million to 12 million. However, the number of active users rose by 600,000 from 11.4 million reported a month earlier.

Most other reported statistics exhibit similar correlations. For instance, the annualized decline in the total value of assets under custody (AUC) was comparable to that of monthly active users (MAU), with a 14% drop from $86.8 billion to $74.7 billion. Nevertheless, AUC experienced a monthly rebound of 20% to reach $62.2 billion.

However, the decline in interest in cryptos and the number of users is not the only problem that Robinhood is currently facing. A few weeks ago, the commission-free broker revealed in a filing that it received an investigative subpoena from the US securities regulator over inquiries around cryptocurrency listings.

"We received an investigative subpoena from the SEC regarding, among other topics, RHC's cryptocurrency listings, custody of cryptocurrencies, and platform operations," the 10-K filing of the broker stated.

Recently, the SEC has been scrutinizing cryptocurrency businesses more closely, which has resulted in Kraken ceasing staking in the US and Paxos stopping the issuance of BUSD stablecoins.

The controversy surrounding Robinhood goes beyond the SEC's activities and includes users' recent struggles to receive payouts on profits made from short positions against the now-defunct Silicon Valley Bank (SVB).

Robinhood Markets, Inc (NASDAQ:HOOD), the US commission-free trading app, has revealed a new alliance with Capitalize, the platform for rolling over retirement accounts. The new partnership is designed to assist customers in locating and transferring their existing 401(k)s into Robinhood's recently launched individual retirement accounts (IRA).

Robinhood Retirement Partners with Capitalize

The popular retail trading services provider introduced Robinhood Retirement last year but has already attracted nearly half a million customers to its IRA offering, which is unique due to its 1% annual match.

"This collaboration will significantly streamline and facilitate the process of rolling over funds for Americans," Steve Quirk, the Chief Brokerage Officer of Robinhood, commented.

As part of the agreement, Robinhood will be prominently displayed on Capitalize's IRA marketplace for users looking to merge their old 401(k) assets. To celebrate the partnership, Robinhood is offering an extra 1% on every dollar transferred from external retirement accounts until April 18.

A 401(k) plan represents a retirement savings program available to numerous American employees, providing tax benefits for those who save. The plan derives its name from a specific section within the US Internal Revenue Code (IRC).

Gaurav Sharma, the CEO of Capitalize, noted that the traditional difficulties Americans face in consolidating retirement savings are due to the outdated rollover process. "Partners like Robinhood recognize this obstacle to wealth accumulation and strive to help users save more effectively for retirement. We are grateful for the confidence Robinhood has placed in our product and team," Sharma said.

Capitalize's enterprise rollover solution, launched in 2021, has been adopted by an expanding roster of popular IRA providers. The solution, which combines proprietary technology and large-scale operations, enables customers to find and fund new or existing IRAs.

Annually, countless Americans either cash out their 401(k) accounts too early during a job transition or abandon them altogether. A study conducted by Capitalize and the Center for Retirement Research (CRR), titled 'The True Cost of Forgotten 401(k) Accounts', reveals that more than 24 million 401(k)s have been left with previous employers, amassing over $1.35 trillion in assets.

The ongoing challenge of locating and transferring these assets following an employment change remains a substantial obstacle in effectively accumulating retirement savings.

Robinhood Faces Falling User Base and Controversies

Robinhood's recent report shows that the monthly active users (MAU) base has contracted 31% year-over-year (YoY) from 17.3 million to 12 million. However, the number of active users rose by 600,000 from 11.4 million reported a month earlier.

Most other reported statistics exhibit similar correlations. For instance, the annualized decline in the total value of assets under custody (AUC) was comparable to that of monthly active users (MAU), with a 14% drop from $86.8 billion to $74.7 billion. Nevertheless, AUC experienced a monthly rebound of 20% to reach $62.2 billion.

However, the decline in interest in cryptos and the number of users is not the only problem that Robinhood is currently facing. A few weeks ago, the commission-free broker revealed in a filing that it received an investigative subpoena from the US securities regulator over inquiries around cryptocurrency listings.

"We received an investigative subpoena from the SEC regarding, among other topics, RHC's cryptocurrency listings, custody of cryptocurrencies, and platform operations," the 10-K filing of the broker stated.

Recently, the SEC has been scrutinizing cryptocurrency businesses more closely, which has resulted in Kraken ceasing staking in the US and Paxos stopping the issuance of BUSD stablecoins.

The controversy surrounding Robinhood goes beyond the SEC's activities and includes users' recent struggles to receive payouts on profits made from short positions against the now-defunct Silicon Valley Bank (SVB).

About the Author: Damian Chmiel
Damian Chmiel
  • 1495 Articles
  • 30 Followers
About the Author: Damian Chmiel
Damian's adventure with financial markets began at the Cracow University of Economics, where he obtained his MA in finance and accounting. Starting from the retail trader perspective, he collaborated with brokerage houses and financial portals in Poland as an independent editor and content manager. His adventure with Finance Magnates began in 2016, where he is working as a business intelligence analyst.
  • 1495 Articles
  • 30 Followers

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