Are you looking to use your retirement dollars to invest in real estate, cryptocurrency, or startups? If so, a self-directed Solo 401(k) or a self-directed IRA may be a good tool for you. Self-directed retirement accounts allow individuals to invest in assets beyond the traditional stocks, bonds, and funds offered by mainstream brokerages.
Rocket Dollar is a low(ish)-cost investment platform that helps regular people take advantage of self-directed IRAs. If you’re self-employed, or you have a sizable IRA or rollover IRA account, you may want to consider self-directed options such as the accounts available through Rocket Dollar.
Here’s what you need to know about the company and its offerings.
- Create non-prototype self-directed IRAs and Solo 401ks
- Flat setup fee and monthly fee that's extremely competitive
- Ability to invest in alternatives via IRA or 401k
$360 Setup Fee + $15/mo
Solo 401k and Self Directed IRA
What Is Rocket Dollar?
Started in 2018, Rocket Dollar is a newcomer to the world of investment platforms. It positions itself as a low-cost and easy-to-use platform for self-directed investors.
How Does Rocket Dollar Work?
Tactically, opening an account through Rocket Dollar is pretty simple. You sign up online, sign a few papers, and fund your investments. Once you fund your investments, you can cut a check and start buying any legal investment.
It’s all fairly straightforward at first glance. But when you peel back the curtains, you see just how much work Rocket Dollar is doing (and how easy it is to screw things up).
When you open an account through Rocket Dollar, you’ll also open an LLC (limited liability company). This company will be owned by your account. Any money used to invest or received from investments hits the LLC’s checkbook. You cannot commingle personal funds and investment funds.
Having the LLC in charge of your account’s investments makes it easier to stay compliant with all laws surrounding self-directed investments. However, it is important to note that you still have to be careful when buying and selling assets. Rocket Dollar emphasizes that it is illegal to “self-deal” or buy or sell assets that you or your business owned.
Also, Rocket Dollar will help file the form 5500 for you if it's required as part of your ongoing services with them.
What Are Rocket Dollar’s Fees?
Each account carries a $360 setup fee, plus a $15/month maintenance fee. Depending on your balance, this can be an incredible deal. Any other fees you incur (such as investment fees) are on top of these fees charged by Rocket Dollar.
Rocket Dollar also has RocketDollar Gold, which allows an expedited funding option with a $600 fee and is $30/month. This is really for people who need to close a deal very quickly and want support.
These fees are more expensive than the free solo 401k plans offered by the major brokerage firms. However, by going this route, you get the ability to control and invest in so much more.
See how their fees compare to other self-directed IRA providers here.
How Do They Compare?
Rocket Dollar isn't the only company in this space, but honestly, there aren't many. If you're looking for a Solo 401k or a Self-Directed IRA, you're going to be looking at just a few companies to help.
Here's how Rocket Dollar compares:
Up to $499
IRA & 401k
IRA & 401k
Whom Are Rocket Dollar’s Partners?
When you invest via a self-directed IRA, you can invest in almost anything. However, Rocket Dollar has several online investment partners that make it easy to invest in crowdfunded real estate, gold, precious metals, cryptocurrencies, startups, and other “alternative” investments.
While I had heard of a few of Rocket Dollar’s partners, most were companies that required a little research.
Rocket Dollar’s investing partners are not a particular strength. That’s not to say that its partners offer bad investments. Rather, investors must do their own diligent searches before putting a single dollar into an investment partner.
But remember, with a self-directed IRA, you can still invest and setup accounts in the name of your IRA or Solo 401k, even if it's not a partner of Rocket Dollar.
Should I Be Investing in Alternatives?
Rocket Dollar makes it cheap and easy to use retirement dollars to invest in alternatives. For the right person this is a “must-consider” investment platform. But whom is the right person?
Generally, I think that most people should stay away from using retirement dollars to fund alternatives investing until that person has established a track record of successful investing.
For example, a person who owns several rental properties has proven that she understands how to buy a rental property. That makes that person a better candidate for this type of account. Likewise, an art dealer who wants to become an art investor may have an advantage when buying and selling collectible art.
In some cases, investing in alternative asset classes can be very lucrative and fulfilling. However, in other cases, you may lose all your money. Alternative investors need to be able to handle both ends of the spectrum.
Rocket Dollar Review
- Pricing and Fees
- Products and Services
- Customer Service
RocketDollar is a self-directed IRA and solo 401k provider. It focuses on keeping its plan easy to set up and manage so you can focus on other priorities.
- They make setting up a self-directed IRA or Solo 401k extremely easy
- Allows you to invest in alternatives in an IRA
- The expedited setup option is great for those needing to have an SDIRA quickly
- Slightly above-average annual fees
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page, or on his personal site RobertFarrington.com.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.