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So, which self-directed IRA is better, Rocket Dollar or ALTO IRA?
In this article, I am going to help you compare Rocket Dollar with ALTO IRA side by side.
How Rocket Dollar Works Vs How ALTO IRA Works
Here’s how Rocket Dollar works.
Rocket Dollar allows you to open self-directed IRA.
Then, it helps you invest in alternative investments such as real estate, private equity and crypto through a LLC that is fully owned by your IRA.
The LLC is a single-member, manager-managed LLC where the single-member is your IRA and the manager is you.
When it comes to investment decisions, your LLC (meaning you, the manager) will be the one that reviews, executes and holds the investment directly.
There is no other party that can interfere.
When you make investments, all the investments are made and held in the name of your IRA LLC.
On the other hand, with a standard custodial IRA, the financial broker-dealer and custodian would directly own and hold an asset for benefit of a customer.
This potentially limit your investment options because you will have to go through their deal review process and get approval.
Also, an LLC makes it very easy for you to move funds without the constant review hassle imposed by most self-directed custodians.
Once your IRA, LLC and LLC bank account are set up, you can start transferring funds or contributing funds to your IRA.
After funds clear the IRA, Rocket Dollar will direct the custodian to contribute the funds to the LLC.
Then, you can wire funds or write a check to fund your investments through your LLC bank account.
If you are self-employed, then Rocket Dollar allows you to open self-directed solo-401(k).
It is structured differently from self-directed IRA.
First, you will have an IRS pre-approved solo 401(K) Plan documents.
Then, Rocket Dollar helps you establish a Retirement Trust as well as open a Trust bank account.
You can then fund your plan by roll-over or new contribution.
After that, you can fund your trust with the money and then use your trust bank account to start investing.
On the other hand, ALTO IRA works like this.
First, you can choose to either open an ALTO IRA account or ALTO CryptoIRA account.
The difference between ALTO IRA and ALTO cryptoIRA is that ALTO IRA allows you to invest in alternative investments such as real estate, startups, collectibles, pre-IPOs and cryptocurrency fund through ALTO’s investment partners while ALTO cryptoIRA allows you to buy and sell cryptocurrencies through Coinbase directly using your IRA capital.
For ALTO IRA, you don’t have to set up LLC or a trust in order to invest in alternative investments.
That’s because ALTO acts as the custodian of your IRA and your investments.
This is very different from Rocket Dollar where your LLC (or trust) custody all your investments and you keep 100% control over your IRA and its investments.
Once you have decided which account you want to open, then you have to choose your IRA Type from Traditional, Roth or SEP.
After that, you fund this account with either your bank account or funds from other retirement accounts.
Once it’s funded, you are ready to invest.
Now, you should have a good idea about how they work.
Next, let’s compare Rocket Dollar with ALTO IRA in great detail.
Rocket Dollar Vs ALTO IRA: Account Types
Both Rocket Dollar and ALTO IRA offer traditional IRA, Roth IRA and SEP IRAs.
But, here’s the difference.
For Rocket Dollar, it provides solo 401(K) to people who are self-employed.
On the other hand, ALTO IRA does not support individual 401(K).
So, when it comes to self-directed IRA account types, Rocket Dollar offers more account types than ALTO IRA.
If you are self-employed and wants to have more control over your retirement investments, Rocket Dollar would be your option.
Rocket Dollar Vs ALTO IRA: Investment Asset Classes
When it comes to investment asset classes that you can invest using your IRA, both Rocket Dollar and ALTO IRA offers a pretty wide range of alternative investment options such as real estate, startups, pre-IPO, collectibles, private credit and cryptocurrency.
On both Rocket Dollar and ALTO IRA platforms, you could find a lot of existing alternative investment options from their investment partners.
One thing to note is that both Rocket Dollar and ALTO IRA are NOT vetting the investments provided by their partners.
They only act as a bridge connecting you with a wide range of alternative investment providers.
So, you are responsible to do your own research and assess the risks of these alternative investments.
Rocket Dollar Vs ALTO IRA: Is Your Retirement Money Safe?
So, how safe is it to create self-directed IRA with Rocket Dollar and ALTO IRA?
With Rocket Dollar, it is NOT a custody of your IRA and your investments.
Instead, it helps you create a LLC (or trust) in the name of your IRA.
So, your LLC (or trust) will be the custody of your IRA investments and you will have 100% control over your IRA and its investments.
In other words, your retirement money is NOT with Rocket Dollars.
If Rocket Dollar closes business, it has no impact on your IRA.
For your cash, it is custodied by the bank where you open your LLC (or trust) bank account.
It’s insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000.
This is what I like the most about Rocket Dollar because its IRA structure gives you the ultimate control over your own retirement money.
On the other hand, ALTO IRA acts as the custody of your IRA and its investments.
On its website, it states that all your IRA funds and assets are separate from Alto’s own cash and assets.
Your IRA account funds and assets belong to you, are held for your benefit, and are not commingled with ALTO’s assets and are not available to their creditors.
So, you have to trust that your IRA will be safe with ALTO.
In addition, ALTO is not regulated by SIPC because Alto is just an administrator of self-directed individual retirement accounts.
They are not a registered or licensed broker, dealer, broker-dealer, funding portal, cryptocurrency exchange, investment advisor or investment manager.
All cash held by ALTO for the benefit of your IRA is insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000.
Having said all that, personally I still prefer Rocket Dollar because it gives me a greater sense of security.
Rocket Dollar Vs ALTO IRA: Fees & Charges
Rocket Dollar offers two different pricing options:
- Silver: $15/month with $360 one-time setup fee
- Gold: $30/month with $600 one-time setup fee
The one-time setup fee is due to the setting up of your LLC in the case of IRA or your trust in the case of solo 401(K).
The difference between Silver and Gold plans is that you would get expedited service and support, four free wire transfer every year as well as tax filing help.
Basically, if you want a white glove experience, you could go with Rocket Dollar Gold plan.
On the other hand, ALTO IRA has two different plans:
- Starter: $10/month
- Pro: 25/month (or $250/year)
Depending on which partner investment you want to invest in, there is also partner investment fee of either $10 or $50 each time an investment is executed for your account.
If you want to bring your own deal or do private investment, you will have to go with Pro plan and also pay an extra $75.
There is also an outward wire transfer fee of $25 for every wire transfer made.
So, which one is better, pricing wise?
Although Rocket Dollar has a large one-time set-up fee upfront, there is no partner investment fee and you also can bring your own deal (i.e. private investment) for free.
From what I see, if you prefer to have a LLC (or trust) to custody all your IRA investment, then the one-time set-up fee does not really matter.
Apart from this, Rocket Dollar is still more competitively priced than ALTO IRA.