Unlocking the power of self-directed retirement accounts for angel investing in businesses and startups

Investing through company-sponsored retirement accounts is a bit like ordering from those limited menus at the annual company dinner party — everyone chooses from the same two or three entrees.

Ordering pork shoulder or beef wellington is fine for the holiday party, but limited options are a handicap when it comes to investing.

This blog explains how Rocket Dollar unlocks the power of a Self-Directed Solo 401(k) to diversify retirement investment opportunities.

Simplifying and streamlining the Self-Directed Solo 401(k)

Historically, people who enroll in company-sponsored retirement plans only have a few options for investment opportunities, and those avenues are clearly defined by the plan sponsor. Investments are usually limited to stocks, bonds, mutual funds, index funds and the like. Companies also pay fees to access these mutual or index funds.

Your choices are limited. You may have a menu of options, but that menu is provided to you.

Rocket Dollar unlocks the true investment power of those retirement funds through Self-Directed Self-Directed Solo 401(k)s. Investors with money tied up in typical retirement accounts now can easily roll those funds over to a Self-Directed Solo 401(k) account and use it for investing in early-stage businesses and other business ventures accessible via crowdfunding sites or investment platforms such AngelList or SeedInvest.

Rocket Dollar streamlined and simplified the process of creating a Self-Directed Solo 401(k). Investors sign up online and Rocket Dollar creates all plan documents. Once the paperwork has been completed and the Self-Directed Solo 401(k) has been established, investors can rollover qualified plans from other financial institutions as well as make contributions from income if they have a business.

Some people want more control of investment opportunities for their retirement dollars. With a Self-Directed Solo 401(k), it’s like going to a restaurant, talking to the chef, and ordering something off the menu. And because it’s self-directed, you are the trustee — you decide what you want to invest in.

Entrepreneurs in the know can refer their potential investors to a Self-Directed Solo 401(k) as an excellent tool for investing in early stage businesses and ventures. Typically, initial funding for new business ventures comes from friends and family. In many cases, however, people who want to dive into the investment pool lack liquidity in their personal banking accounts. If they have individual retirement accounts from previous employers, they can easily tap into those funds. We recommend investing in startups with a small percentage of those assets — these are risky investments.

By opening a Self-Directed Solo 401(k) through Rocket Dollar, you can unlock venture capital to invest in a business startup, real estate deals or rental properties. This funding mechanism has always been there, but most people haven’t been able to use it or simply didn’t know how.

Historically, it was difficult and expensive to establish a Self-Directed Solo 401(k). It required working with a trust company, filling out reams of paperwork, and lots of back-and-forth. Rocket Dollar simplified the process so everyday investors can quickly put their retirement funds to work — all while maintaining the current tax advantages.

Establishing a Self-Directed Solo 401(k) or a Self-Directed IRA through Rocket Dollar provides investors with four main benefits:

1. People with existing individual retirement accounts can roll those accounts over into a Rocket Dollar-established Self-Directed account and unlock those dollars for a wider range of investment opportunities.

2. Investors retain the tax benefits of current retirement accounts.

3. Everyday investors can participate in crowdfunding business deals across the country, from tech startups to coffee shops, restaurants and many other business ventures.

4. Angel investors can deploy another investment tool and can use retirement funds for investing rather than depleting on-hand liquidity.

People should have the ability to invest in who they want, where they want and what they want. Rocket Dollar doesn’t make it any easier to find the right investments, but we do help you put more of your money to work.

Every big company at some point started out as a small one. Most probably had investors at some point. There can be substantial reward for investing in the right early-stage company because it’s all wrapped up in a tax-sheltered vehicle.