Sense Financial Recommends Individual 401k in Light of Lawsuits Against Self-Directed IRA Custodians

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A Wall Street Journal article reported two lawsuits against self-directed IRA custodians and raised concerns of abused self-directed IRA accounts. Sense Financial recommends Individual 401k as a way to avoid losing control over retirement funds.

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With no custodian in the picture, account holders of Solo 401k plans can have direct access and true control over their retirement funds. This will eliminate the risk of custodial power abuse and enhance the security of the funds.

Owners of self directed IRAs went after their custodians after losing money in various investment schemes, a Wall Street Journal article reported on April 17, 2012. Such incidents show that while a Self-directed IRA offers some control and flexibility to account owners, it is vulnerable to be abused if not managed properly. At a time when concerns are raised against custodial ethics and credibility, Sense Financial recommends Individual 401k accounts for security and control. This retirement solution allows account owners to be the trustees of their funds instead of relying on a custodian.

The issues with self directed IRA gains a lot of attention among investors, the article explained, because self directed IRA accounts have gained major popularity in the past years. And it is for a good reason. Self-directed IRA, if managed properly, offers many benefits to account holders. With a self-directed IRA, account holders can choose to invest in different investment options, including property, hedge funds, or private placements. This benefit stands out after investors lost trust in the stock market, which affected millions of retirement accounts throughout the country in 2008.

Sense Financial Services recommends individual 401k plan, often known as Solo 401k, as it offers the same flexibility as a self directed IRA. With an individual 401k account, investors can also freely invest in almost any legally available investment option.

The difference is that, a Solo 401k plan completely eliminates the role of a custodian. Even with a self-directed IRA, it is still required that a custodian manages the account, which turns out to be an imperfect setup. As the WSJ article reported, Equity Trust Co. and Entrust Group Inc., two IRA custodian companies, were sued by their clients for failing their custodial responsibilities (NO. C 12-03959 WHA - United States District Court, N.D. California). The case was eventually dismissed, but investors remain wary of custodian services.

Such incidents will not happen with an individual 401k account as the plan holder will automatically become the trustee of their own account. This means that they will be able to manage the account directly without relying on a custodian. With this, account holders can save on costly custodian fees, which can be calculated per transaction or based on the total value of the account. Also, with no custodian in the picture, account holders of Solo 401k plans can have direct access and true control over their retirement funds. This will eliminate the risk of custodial power abuse and enhance the security of the funds.

Sense Financial is California's leading provider of retirement accounts with "Checkbook Control": the Solo 401k and the Checkbook IRA. Over the years, they have assisted hundreds of clients to obtain checkbook control over their retirement accounts while providing them with the ability to invest in virtually any investment class, including real estate, private lending, mortgage notes and much more without the need for custodian approval.

To learn more about Solo 401k, please visit sensefinancial.com.

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Vanessa Pham
SenseFinancial.com - Retirement Accounts with Checkbook Control
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