If you’re looking for a self-directed IRA or Solo 401 (k) plan to invest in alternative assets, you need to research Rocket Dollar.
The platform is specially designed for investors who want to hold non-traditional assets, such as precious metals, cryptocurrencies, real estate, and peer-to-peer credit investments.
Even if you’re happy with your current employer-sponsored plan, you may want to add a Rocket Dollar account to add some alternative investments to your retirement plan portfolio mix.
About Rocket Dollar
Rocket Dollar was founded in 2018 and is based in Austin, Texas. The company is an investment platform that enables people to better control their retirement savings.
The service allows account holders to invest in any asset class approved by the IRS.
This includes unconventional assets such as:
These are all assets that you wouldn’t expect in a typical retirement plan, especially one that is employer-sponsored. This is also an advantage over most other investment platforms, which specifically exclude this type of investment.
Rocket Dollar is available for self-directed IRAs and Solo 401 (k) accounts. The platform offers a “checkbook control” of your retirement account. You can make an investment by writing a check, sending a wire transfer, or using a debit card.
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How Rocket Dollar Works
Rocket Dollar first walks you through the process of opening a Solo 401 (k) or self-directed IRA. Each account has its own bank account. You can invest in virtually any asset that is not prohibited by the IRS.
The Rocket Dollar Investment Tracker can help you keep track of your investments. You can easily keep track of all investments in your account.
To take control of your checkbook account, set it up as part of an LLC. Rocket Dollar will provide you with the statutes, company agreement, and employee identification number (EIN) required to open a commercial bank account.
The LLC is owned by your IRA so you can invest through it.
With a Solo 401 (k) you open a trust account. Rocket Dollar will again provide you with planning documents and an EIN document that you can use to open an escrow account with a bank.
If you also open a Roth account, you will need a second account. You can also create an LLC in your Solo 401 (k) if you want to keep real estate in your plan.
Once you have opened a bank account through either an LLC or a trust, the account will allow you to purchase investments of your choice. The bank account is owned by the LLC or trust that owns your retirement plan.
Of course, you can also use your plan to invest in more traditional asset classes like stocks, bonds, mutual funds, exchange-traded funds, and options. This can be achieved by having traditional brokerage accounts with your Rocket Dollar IRA LLC or trust.
Rocket Dollar Features and Benefits
- Minimum initial investment: N / A.
- Available accounts: Solo 401 (k) and traditional, Roth, and rollover IRA accounts.
- Permitted investments: Single or Multi-Family Rentals, Precious Metals, Cryptocurrency, Vacant Land, Mineral Rights, LLCs, LPs, and C-Corps; Joint ventures, real estate and business loans, and even racehorses. You can also invest in more traditional assets like stocks, bonds, funds, certificates of deposit, and options.
- App: Not available.
- Customer service: Live phone support is available Monday through Friday from 9:00 a.m. to 5:00 p.m. (local time). You can also open an electronic ticket or leave voicemail 24 hours a day.
- Custodian: Funds held with Rocket Dollar are held with their preferred banking partner, the IRA Resources Trust (IRAR).
- Account protection: Cash balances are covered by FDIC insurance through the IRA Resources Trust. However, due to the nature of the alternative investments included in your plan, these are not covered by SIPC. However, if your plan includes a conventional asset brokerage account, SIPC coverage should be available through that account.
- Account security: Rocket Dollar is a SOC2 certified company. That means it has undergone rigorous audits to ensure that security standards are always up to date and at the highest level. Originally developed by the American Institute of Certified Public Accountants, it is defined as a criterion for managing customer data based on security, availability, processing integrity, confidentiality and data protection.
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Self-Directed Rocket Dollar IRAs and Solo 401 (k) Self-Directed Accounts
Rocket Dollar offers two basic plans, the self-directed IRA and the self-directed Solo 401 (k) plan.
The self-directed IRA can be either traditional or Roth. The benefit of a self-directed IRA with Rocket Dollar is that your investment opportunities are virtually limitless.
You can hold virtually any asset that is not available on traditional investment brokerage accounts or robo-advisors.
This means you can add actual real estate to your account instead of a real estate investment trust. As mentioned earlier, you set up an LLC owned by your IRA and can make alternative investments through that LLC.
You can also invest in hard cash, venture capital, and startups and private companies using the same format.
Self-guided Solo 401k
The Solo 401 (k) plan works similarly to the self-directed IRA, except that you set up a trust owned by the plan rather than an LLC. Your alternative investments are held through the trust. You must also be self-employed to set up a Solo 401 (k).
A Solo 401 (k) plan has the main advantage over an IRA with much larger contributions. For example, you can contribute up to $ 19,000 per year through 2019, or $ 25,000 if you are 50 years or older.
However, you can also make an employer contribution of up to 25% of your remuneration in addition to your employee contribution. The total of employee and employer contributions can be up to $ 56,000, or $ 62,000 if you are 50 years or older.
Not only does the Solo 401 (k) plan allow you to quickly build a large retirement plan, it also gives you a very high tax deduction. Additionally, with a Solo 401 (k) plan, you can borrow money against the plan. You can borrow 50% of the value of the plan, up to $ 50,000.
Rocket Dollar Rates and Fees
Rocket Dollar operates on a flat monthly fee of $ 15. This will be beneficial for larger investors. For example, if your account is $ 100,000, then $ 15 per month is $ 180 per year. This equates to an annual value of 0.18%, which is below the typical 0.25% to 0.50% fee charged by robo-advisors.
On a percentage basis, the fee is high on smaller accounts. For example, with a $ 10,000 balance, $ 180 per year is a 1.8% charge.
Rocket Dollar also charges a one-time registration fee of $ 360. This brings in the $ 560 Expedited Service that allows you to participate in a deal that needs to be funded quickly.
There are no transaction fees for a Rocket Dollar account as all investments are purchased directly through your LLC or Trust bank account.
All fees can be paid using a debit card linked to your retirement account or a credit card if you wish to receive your retirement balance.
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Advantages and disadvantages of the rocket dollar
- The $ 15 flat monthly fee is particularly attractive to larger investors as they pay a lower percentage fee than most investment platforms.
- Rocket Dollar lets you invest in more asset classes than other platforms, including precious metals, cryptocurrencies, and peer-to-peer lending.
- Rocket Dollar also specializes in Solo 401 (k) self-directed plans. These allow you to make much larger contributions, which gives you a greater tax deduction, as well as the ability to borrow against the plan.
- A self-directed IRA or Solo 401 (k) plan with Rocket Dollar can be the perfect addition to your age portfolio mix for holding alternative investments with more traditional investments.
- There is an application fee of $ 360.
- The monthly fee – especially in combination with the registration fee – is expensive for smaller investors compared to other investment platforms.
- Customer service is only limited to regular business hours.
- No mobile app is offered with the service.
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You should sign up with Rocket Dollar
Rocket Dollar is a highly specialized retirement plan investment service that is not suitable for all investors. It is best for those who understand alternative investments and have the risk tolerance to include them in their retirement plans.
It’s also a great option for anyone who already has a comprehensive retirement plan that focuses on more traditional investments like stocks, bonds, and funds. A Rocket Dollar account gives you the opportunity to add alternative investments to your overall retirement plan mix.
This works especially well for those with a larger balance – especially over $ 100,000 – as the fee structure will effectively be lower than most robo-advisors.
However, since the investments held in Rocket Dollar are real alternatives, this is not a good choice for anyone unfamiliar with this type of investment. It is a higher risk than traditional investments and requires expertise. Another important factor is that Rocket Dollar isn’t managing your investments for you. You are fully responsible for all investment management.
Also, the fee structure of $ 15 per month for smaller accounts, especially accounts under $ 20,000 or $ 30,000, will be excessive.
However, if you have a bigger account, an appetite for higher risk, and at least some knowledge of investment alternatives, Rocket Dollar is the perfect retirement platform for you.
For more information or to sign up for the service, visit the Rocket Dollar website.