Rocket Dollar review
Diversify your retirement portfolio with alternative investments and keep the tax benefits of retirement plans.
Rocket dollar is a retirement saving platform that allows you to open a self-directed IRA or solo 401(k). But unlike traditional retirement plans, Rocket Dollar lets you build your portfolio with alternative investments including cryptocurrency, real estate and start-up companies.
- Consider Rocket Dollar if you want to build and manage your own portfolio utilizing alternative investments and any asset class allowed by the IRS.
- Look elsewhere if you want your retirement account professionally managed by an investment firm or a sophisticated computer algorithm.
$15 per month
Who is Rocket Dollar best for?
- Everyday retirement savers. Rocket Dollar was designed to help people manage their retirement savings with more options than what’s typically offered through traditional brokerages. So this may be the right product for you if you want to diversify your retirement portfolio with asset classes like real estate, peer-to-peer loans and startups.
- Sophisticated investors. Although you can still invest in traditional investments like stocks and bonds through Rocket Dollar, the platform was designed to give savers access to more investment options. But because some of these securities such as cryptocurrency and startup companies can be very volatile, they may be better suited for experienced investors.
- Day traders. With Rocket Dollar, you manage and track your portfolio’s performance entirely on your own. So it may be a good choice for experienced day traders who are comfortable with analyzing and picking investments.
- The self-employed and small business owners. Rocket Dollar offers solo 401(ks) and self-directed IRAs. These investment options are generally designed for people who work for themselves or run a small business.
Pricing and fees
The cost of using Rocket Dollar depends on the type of account you get.
|Available accounts||Self-directed IRA, Solo 401(k)||Self-directed IRA, Solo 401(k), Inherited IRA|
Rocket Dollar charges one-time activation fees for establishing your account. According to its website, the monthly fee is for administration and compliance services. Rocket Dollar’s fee structure is quite different from what you’d see with traditional brokerages. Rocket Dollar doesn’t charge annual management fees based on the value of assets under management (AUM). Popular robo-advisors like Betterment and Wealthfront charge a 0.25% AUM fee, which is deducted from your account.
A 0.25% annual fee on a $10,000 investment is $250. When you invest in Rocket Dollar, you pay $180 for a core account each year and $540 the first year because of the activation fee. This fee structure is more predictable than most, but it can cost considerably less to invest in an account with a popular brokerage. However, Rocket Dollar stands out for its investment options, which you won’t find with traditional brokerages.
What makes Rocket Dollar unique?
Rocket Dollar stands out for offering access to alternative investments. Traditional brokerages typically limit securities you can invest in through a retirement plan to stocks, bonds, mutual funds and ETFs. But with Rocket Dollar, you can diversify your retirement portfolio with any asset class allowed by the IRS. So you can invest in the following:
- Real estate
- Precious metals
- Peer lending
- Startup companies
Note that many of these securities aren’t very liquid. So they may not be the best option for someone nearing retirement or anyone who would need their funds soon.
When you open an account with Rocket Dollar, you also open a limited liability company (LLC) owned by your account. Rocket Dollar provides you with a checkbook and debit card linked to the LLC. You can use these to buy and sell securities. Your account is held at a partner bank. Rocket Dollars investment and banking partners are the access point to assets since Rocket Dollar is not a brokerage firm.
So which type of account should you pick?
This is a type of individual retirement account (IRA) that allows you to invest in alternative investments. Even though it’s held by a custodian or trustee that partners with Rocket Dollar, you manage this account entirely on your own. So you won’t get any type of investment advice from Rocket Dollar. The company offers traditional and Roth options.
With the traditional option, you can deduct contributions from your income taxes. The Roth option allows you to make qualified withdrawals tax-free after you reach age 59.5 if the account has been open for at least five years.
|Self-directed IRA||Self-directed Roth IRA|
|Income limits for 2022||None||Maximum modified adjusted gross income (MAGI) must be less than $129,000 for single filers or $204,000 for married couples.|
|Contribution limits for 2022||$6,000 per year, or $7,000 if you’re 50 or older||$6,000. If you are older than 50, you can contribute up to $7,000|
|Tax benefits||Deduct contributions from taxes||Tax-free withdrawals after age 59.5 if the account has been open for at least five years|
|Withdraw rules||Make penalty-free withdrawals after reaching age 59.5. You pay income taxes on the withdrawals||Withdraw contributions penalty and tax-free anytime|
Withdraw earnings tax-free after reaching age 59.5
This is a retirement plan designed for self-employed workers with no employees other than their spouses. In fact, only these types of individuals are allowed to open solo 401(k)s.
It offers some of the same benefits of a traditional 401(k). However, you can make contributions both as the employee and the employer. So in this sense, you maximize your contribution limits. As with a self-directed IRA, Rocket Dollar offers traditional and Roth options.
But a major difference is when it comes to contribution limits. That’s because you play two roles when investing in a solo 401(k). You are the employee and the employer since you’re working for yourself.
As an employee, you can contribute up to the lesser of total compensation or $20,500 in 2022. If you’re age 50 or older, you can contribute an additional $6,000 as the employee. As the employer, you can make additional contributions up to 25% of your compensation. If your spouse works for you, the same rules apply. So together, you can essentially double these limits.
This option may best suit small business owners with W2 employees. But you must contribute equally to eligible participants, and it’s only available through Rocket Dollar’s gold account. The employer contribution limit for 2022 is the lesser of 25% of the employee’s compensation or $61,000.
Your employees are eligible for a SEP IRA if they meet the following requirements.
- The employee is 21.
- The employee has worked for the employer for at least three out of the last five years.
- The employee has received at least $600 in compensation.
How easy is it to use?
Rocket Dollar is fairly easy to use. You can open an account online and monitor your investments via your dashboard. However, remember that you’re in complete control of your plan. So you should carefully vet all investment options and consider potential risks. You may also want to work with a financial advisor and CPA to manage your account. Rocket Dollar is not an investment advisory firm and can’t legally offer investment advice. With that said, a Rocket Dollar account can be complicated and may best suit
How do I sign up?
Signing up for Rocket Dollar is fairly easy.
- Visit Rocket Dollar’s website and select the Sign-up button.
- Answer questions about yourself.
- Choose the account type.
- Link your external bank account to the fund.
- Open an account.
According to the Rocket Dollar website, the process takes about five minutes. Rocket Dollar notes it can help with compliance and IRS reporting if needed.
Is Rocket Dollar legit?
Rocket Dollar is a legitimate business, but a very young one. It emerged in 2018 and is based in Austin, Texas.
It’s not currently registered with the Better Business Bureau (BBB) or listed by the Consumer Financial Protection Bureau (CFPB). So you may be taking considerable risk working with a company that hasn’t really made its mark. And some investment options can be illiquid and volatile.
Unless you seek qualified financial and accounting advice outside Rocket Dollar, you’re pretty much on your own. Even if you open a traditional IRA through Rocket Dollar, you are still responsible for managing it.
Rocket Dollar reviews and complaints
Online user reviews of Rocket Dollar are nearly nonexistent. So while the company is a legitimate business, it doesn’t have a public track record you can check this way. If you’re going to work with Rocket Dollar, carefully analyze your investment options since Rocket Dollar essentially opens up the universe of investments.
But that doesn’t mean you can invest in absolutely anything. The IRS doesn’t allow solo 401(k)s and IRAs to invest in certain securities, including:
- Life insurance
- Collectibles (stamps, cars, art, beanie babies, etc.)
- S-Corp stock
- Alcoholic liquors and beverages (fine wine, liquor collectibles, etc.)
- Coins, and Metals not on the approved list of precious metals
Pros and cons
- Vast investment options
- Multiple account types
- Digital tools to help track your investments performance
- Young and emerging company
- Investment options can carry significant risk
- Some investment options may not be as liquid as others
How do I contact Rocket Dollar support?
- Call. 855-762-5383.
- Email. Customer support at email@example.com.
- Live chat. Available on their Facebook page.
Compare other retirement accounts
If Rocket Dollar isn’t for you or you want some help with managing your retirement portfolio, check out other investment options. Most of these firms allow you to open traditional and Roth IRAs as well.
Rocket Dollar can be a great way to build a retirement portfolio with alternative investments. But because these investments can be complex, it may be more suited for experienced investors with a high degree of risk tolerance. If you feel this isn’t for you, you can always explore other investment platforms.