Rocket Dollar is a self-directed IRA and 401(k) provider that has been in operation since 2018. In this Rocket Dollar Review, we’ll look at:
- What to expect (timeline, fees, and account management).
- What you can and can’t invest in with Rocket Dollar.
- The pros and cons of using Rocket Dollar.
- In-depth comparisons to leading self-directed IRA alternatives.
- Who the service is right (and wrong) for.
Rocket Dollar is best suited for experienced investors with a high net worth. The service leverages a unique account structure, creating an LLC for each client that provides the ability to invest in any type of asset permissible inside an IRA. This includes real estate, private company stock, and other more exotic options (such as crypto held in a private wallet and traded on a decentralized exchange). Their account management fees, which include both a one-time setup fee and a minimum monthly fee of $15, make it better suited for balances above $25,000.
- Offers both IRAs and 401(k)s.
- The flat annual fee (a minimum of $180) benefits large balances.
- Expedited option for those who need to fund a deal fast.
- Allows you to invest in a wider array of asset classes compared to alternatives.
- Has a one-time setup fee to open an account.
- The flat annual fee is expensive for small balances.
- Limited customer service options for lower-tier accounts.
- Best-suited for very hands-on investors.
Rocket Dollar 101
Self-directed IRA providers have been around for years, but many investors have stayed away from them for two reasons:
- Excessive fees, which tend to be less straightforward than traditional investment options. These accounts often have numerous fees, on top of a standard percentage-based account management fee, that eat away at returns.
- Limited investment options. Many providers specialize in just one asset class, such as gold or real estate.
It’s very difficult to beat the stock market; if you’re paying 3% in fees, it becomes almost impossible to win in the long term.
Fortunately, a number of new companies have emerged to try and solve this problem. Rocket Dollar is one of the leaders in this category; its fees are transparent, it doesn’t limit your investment options, and it boasts a modern website that makes managing your account easy.
How Rocket Dollar Works
Rocket Dollar offers a much different experience than you’ll find with a traditional IRA or 401(k) account. Notably, there’s no list of predefined investment options. Instead, you’re on your own.
To facilitate this, Rocket Dollar sets up an LLC for IRAs or a trust for 401(k)s. You’re then allowed to hold any investment legally allowed in a retirement plan. Surprisingly, the list of what’s not allowed is quite short, with life insurance and collectibles being the most notable exclusions.
That LLC or trust is the legal owner of the account, and it’s where any and all transactions, expenses and income received must be conducted and held. This is known as having “checkbook control,” because you’re literally able to write checks for any investment you please.
The advantage of having an LLC or trust is that it allows for simple record keeping, on both your end as well as Rocket Dollar’s.
As they explain in their FAQ:
“When you directly own an alternative asset in your IRA, it must be held with a non-bank trustee or custodian. Both traditional and self-directed custodians will only hold an asset for you as long as it is approved by their investment team. Once approved, the custodian will place its name on the investment for your retirement account’s benefit.
In the Rocket Dollar model, your LLC reviews, executes and holds the investment directly. There is no other party that can interfere.”
The graphic below illustrates the Rocket Dollar model:
The big advantage of Rocket Dollar is its versatility. Many self-directed IRA providers limit what you can invest in (and where you can invest). But with Rocket Dollar, there are no limitations. For example, if you want to invest in crypto, you’re not just limited to one partnered exchange, as is the case with some competing options.
Rocket Dollar Plans: Silver vs. Gold
When you sign up for Rocket Dollar, you’ll choose between the Silver and Gold Plan. Here are the differences.
|Rocket Dollar Silver||Rocket Dollar Gold|
|Account fees:||$360 setup fee, then $15 per month.||$600 setup fee, then $30 per month.|
|Setup time:||2-4 weeks||15 calendar days|
|Account types:||Traditional IRA, Roth IRA, and solo 401(k).||Traditional IRA, Roth IRA, solo 401(k) and inherited IRAs/401(k)s.|
|Transfer existing self-directed account:||Unavailable||Available|
|Fair market value reporting:||Available||Available|
|Form 5500 filing:||Manual||Automated|
Rocket Dollar Pros and Cons Explained
Rocket Dollar Pros
- Account types include both IRAs and 401(k)s. Many self-directed providers do not offer solo 401(k)s. This is a big plus for solopreneurs, who can take advantage of the larger contributions limits offered by 401(k)s.
- The flat annual fee (which is a minimum of $180) benefits large balances. The fees are the same for someone with $500,000 in their account as someone with $500. Most alternative options charge a percentage fee for assets under management, which is more expensive (to the point of being prohibitive) for those with a larger balance.
- Has an expedited option for quick turnaround. For Gold customers, Rocket Dollar’s goal is to fund the account within 15 days. If you’re waiting to close on an investment, such as a funding round in a startup with a tight deadline, this expedited option assures your account is worked on first every day and gives you the highest chance of having your funds able to be deployed in time.
- You can invest in a wider variety of asset classes compared to alternatives. While other self-directed providers limit what you can invest in, Rocket Dollar allows you to invest in anything that’s permissible within tax-advantaged accounts. For example, one popular alternative for crypto investors is Choice IRA, which allows you to invest in crypto but only through Kraken. With Rocket Dollar, you can choose both what to invest in and where to invest (e.g., Coinbase or inside a private wallet).
Rocket Dollar Cons
- There’s a one-time setup fee to start. This is true even for someone with $0 in their account. As such, many investors opening an IRA or 401(k) with a $0 balance are already in the hole. Unless you’re looking to contribute the maximum each year, this is high for smaller investors, and such investors might be better served with a provider that charges a percentage-based fee.
- The flat annual fee is expensive for those with small account balances. After paying the setup fee in the initial year, the minimum annual fee is $180. For someone with an account balance of $18,000, this would come out to a 1% annual fee — which is close to what’s offered by top alternatives. If your account is less than that, the cost is relatively high.
- Offers limited customer service options for the lower-tier account. Rocket Dollar prioritizes Gold clients — who pay an annual fee of $360 and a setup fee of $600 — over its Silver clients. Silver customers can only email support or schedule a phone call; there’s no option to speak to a live agent, either through phone or chat.
- It’s best for very hands-on investors. Even with a more passive investment, such as a crypto index fund, there’s still work involved in managing your account. You need to understand what you’re allowed to invest in and ensure all transactions are kept separate from personal investments. Also, Silver customers are required to file their own Form 5500. Overall, self-directed accounts are best suited for advanced investors with a well-thought-out asset allocation strategy.
Rocket Dollar vs. Alto IRA vs. Choice IRA
Two similar self-directed platforms are Alto IRA and Choice IRA.
Here’s a breakdown of their key differences:
Things that stand out with Rocket Dollar and its competitors include:
- Rocket Dollar is one of the very few companies in the space that allows you to open an individual 401(k).
- Both Rocket Dollar and Alto IRA have monthly management fees and don’t charge fees based on a percentage of assets, which benefits larger account balances. Choice IRA charges based on assets under management, which benefits smaller investors.
- One of Alto IRAs best features is that it syncs with third-party investment providers (such as Fundrise), which makes for easier account management. While Rocket Dollar does have some partners, its list is limited to six providers. By comparison, Alto IRA has over 50+ partners.
- Choice IRA offers a crypto account with no annual fees. They achieve this by lending out the crypto that’s held in your account. This is a worthwhile option for those looking to add a small percentage of crypto to their portfolio. Choice also allows you to either own your own keys or use their cold storage provider (the latter for a 1% fee).
Related: Learn more about Rocket Dollar alternatives in our list of the best crypto IRAs.
Rocket Dollar FAQ
Rocket Dollar was founded in 2018 by Henry Yoshida, Rick Dude and Thomas Young. In September 2021, Rocket Dollar received a Series A investment round of $8 million, led by Park West Asset Management. Todd Rupper (former T. Rowe Price Global Investment Services CEO and president) was named a board member at this time.
Rocket Dollar is a legitimate service provider that’s grown a large asset base in a short period of time thanks to its unique product offering. In the company’s September 2021 Series A round, it had over $350 million in assets under management.
The requirements to set up a one-participant 401(k), also known as an individual or solo 401(k), are set by the IRS. To qualify for a one-participant 401(k), you need some form of self-employment income inside of a business with no employees (aside from your spouse).
Our Review Methodology
Our review methodology is an independent assessment by The Ways To Wealth team, overseen by CERTIFIED FINANCIAL PLANNER™ and site founder R.J. Weiss. Our end goal is to publish fair, honest and unbiased assessments of financial products and services, offering our readers the same analysis we provide to friends and family. You can read more about our review methodology here.
Is Rocket Dollar Right For You?
A self-directed IRA or 401(k) account isn’t for everyone.
First and foremost, it’s for an experienced investor — someone who deeply understands the asset class they’re looking to invest in and, just as importantly, why adding that investment to their overall portfolio aligns with their objectives and risk tolerance.
Second, Rocket Dollar is for investors with a larger existing balance within their retirement plan that they’re looking to roll over, or those who will quickly grow their account by contributing the maximum amount each year. A rough break-even point is $25,000, as this means you’ll pay under 1% in account fees each year after the initial setup fee is paid.
If you do have a proper asset allocation in place, knowledge in alternative investments, and a relatively large account balance, you can learn more by visiting the Rocket Dollar website.
Is Rocket Dollar the only (reputable) alternative IRA that provides Checkbook control?
Rocket Dollar is the most popular for sure, as it’s their main offering.
Alto IRA does offer checkbook control as well, they’re just mainly known for their access to crypto.
Can I add my existing cryptocurrency to a RocketDollar IRA, or no because that would have been assets purchased by me personally and not the LLC? Also, do they allow a Roth IRA?
Unfortunately, you can’t transfer existing crypto holdings into a RocketDollar IRA. You’d need to sell, incur potential capital gains tax, and then transfer the cash into an IRA.
Thanks! From what I’ve learned since posting this, this is the case with all IRA — cash contributions only.