Acorns Later is a retirement account helping you invest into Roth IRAs, traditional IRA, and SEP IRA. Start your retirement account to save and invest for the later years.
What is Acorns Later?
Acorns Later is an IRA and part of the Acorns Invest app enabling you to invest your spare change–round up your purchases to the nearest dollar. With Acorns portfolio, your tax-advantaged investments are managed for you through a Robo-advisor. It automatically selects the right plan for your lifestyle and goals.
Save for retirement with Acorns IRA options including SEP, Traditional, & Roth plans with as little as $5 to turn your acorn into a might oak.
What’s an IRA?
IRA stands for Individual Retirement Arrangement, a tax-advantaged account.
Why Invest in an IRA?
IRAs can help you invest for retirement with potential tax advantages. Tax-advantaged accounts like IRAs are a type of retirement savings plan where you get tax benefits such as tax exemption or tax-deferral.
- Benefit from tax advantages. Depending on the IRA, you can save taxes now with a deduction or save later with a tax-free withdrawal.
- Grow your investment account with income from interest, dividends, and capital gains.
How Acorns Later IRA Works
Depending on your income, employment, lifestyle, and goals, Acorns will automatically suggest the right IRA for your situation and risk tolerance.
With Later, you can add to your retirement savings one-time or through recurring contributions (that take place daily, weekly, and monthly). You’re still subjected to annual IRS limits. For 2020, the IRS contribution limit is $6,000 for most people ($7,000 if you are 50 or older).
There are 3 types of Acorns IRAs:
- Traditional IRA – contributions with money you may be able to deduct on your tax return. Earnings can potentially grow tax-deferred until you withdraw them in retirement
- Roth IRA – contributions with money after taxes have been paid. Earnings grow tax-free.
- SEP IRA – a Simplified Employee Pension (SEP) plan provides business owners with a simplified method to contribute to their own retirement savings.
There are no minimum balance and zero trading commissions. Your Acorns IRA investment portfolio may contain low-cost exchange-traded funds (ETFs), individual stocks, and fractional shares, and bonds.
Features & Benefits
Acorns IRA and Roth IRA take full advantage of the same features found with Acorns Invest. Read the Acorns app review for more details.
- Minimum Investment Amount: $0 to open an account but will need $5 to start investing.
- Automation: automate your deposits with recurring contributions.
- Robo-advisor: your IRAs are managed and optimized based on your age and the time until you reach “retirement age,” which is currently 59 ½ years old according to the SSA. The algorithms automatically rebalance your investments over time.
- Diversified portfolio: investing strategies include exchange-traded funds (ETFs) with six asset classes: large, mid-and small-cap companies, emerging markets, government bonds, corporate bonds,
With Acorns Later, you can transfer and roll over your existing retirement plans and potentially save on management fees.
- Transfer an IRA: transfer your existing brokerage account into an Acorns IRA.
- Roll Over a 401(k): submit a request to roll over your employer-sponsored plan by starting your request with support.
With Acorns Later, you can contact support via AI chat.
How much does it cost? There is no additional cost for Later with the Personal tier.
Monthly management fee: $3 per month
The flat management fee for Acorns Personal features including investment, retirement, and checking, a debit card, bonus investments, financial advice, and more!
It’s important to understand all IRA accounts are regulated. There are tax implications. Withdrawing money before retirement age can result in taxes, early withdrawal fees, and penalties assessed by the IRS.
Who is it best for?
Acorns IRAs are best for new investors who desire automatic investing and using extra money to fund retirement goals.
Acorns IRA Review
Acorns is a legit company and its Later IRAs is a good investment option.
In our Acorns review, we learned how it can help meet your retirement investment goals through Robo-advising and automatic contributions. Acorns Later is good for hands-off investors who don’t want to think about expense ratios or risk levels.
Whether you’re a current or new Acorns user, Later can be a product to help you finally save for retirement. Depending on your work situation and current retirement contributions, Later does all the work to recommend the best account for your situation.
If you desire financial advice, you’re best to choose an alternative such as Betterment or Personal Capital, both offer access to an investment advisor.
For non-current users: Start saving into Traditional or Roth IRAs by opening an Acorns Personal tier.
How to Start Using Acorns Later
The time needed: 2 minutes.
Step-by-step to open an Acorns IRA
- Getting started
Log in to your account or click on the link.
- Open an IRA account
Complete the signup process by answering questions.
Acorns IRA Alternatives
What is Acorns?
Acorns is a financial services company offering a suite of financial products to help people invest their spare change or take small steps towards their financial goals. As a Robo-advisor, the algorithms use modern portfolio theory emphasizing asset allocation diversification to lower risk and maximize returns.
The financial wellness system includes:
- Invest–micro-savings and basic investing.
- Spend–a bank account with checking, debit card, direct deposit plus no minimums.
- Later–tax-advantaged accounts for your retirement.
- Early–custodial accounts for your children.
Additional tools include Earn which helps you earn cash-back for using recommended services from partners or through the use of the Spend debit card. And Grow offers users educational content, interviews, and reviews.
How much do you need to retire comfortably?
Whether you decide to retire later or retire early, using a retirement calculator can help you plan your investment strategy. Using a retirement calculator can help you determine how much money you’ll need in retirement. Read more on how to calculate your retirement using the financial independence number calculation.
Can you withdraw from your Acorns Later account?
You are allowed early withdrawals but there are tax implications for doing so including possible income taxes, 10% early withdrawal penalty, and other fees. Learn more about the taxes and penalties from the IRS website.
Betterment vs. Acorns
Both Robo-advisors are great retirement planning apps with simple interfaces and low barriers. With Acorns, you get automatic investing features using its famed “invest your change” helping you start with as little as $5. In contrast, Betterment offers additional benefits including goal setting.