Tibble v. Edison: 401(k) plans require periodically reviewing

Plan owners can monitor their investments and take control with a self-directed Solo 401k

401(k) plan participants can now sue their plan administrators for selecting investment products with excessive fees.

In the case of Tibble v. Edison, former workers of Edison International alleged that their plan fiduciaries have selected six retail-class mutual funds with higher fees than other comparable funds. Although the funds were selected in 1999, which exceeds the six-year statute of limitations, the court ruled in favor of the Edison former workers, deciding that the fiduciaries have an ongoing responsibility of monitoring and selecting appropriate investments.

While the court ruling is in favor of the 401(k) plan participants, in practice, there is still the question of how often plan fiduciaries need to review the investments, and how reviews need to be done.

Sense Financial, a provider of self-directed IRA and Solo 401k plans, recommends that plan participants take matters in the own hands.

For example, workers can set up a self-directed IRA which gives them control over the investments in their retirement accounts. While there is a custodian in place, he or she will take a passive role and give plan participants the ability to select and review investment assets.

Those with a side business or contractor job without any other employee are also qualified for a Solo 401(k) plan. With this, the plan participant can also assume the role of a plan fiduciary and administrator.

With that, the plan owner can select any stocks, mutual funds, or bonds that best fit their criteria in terms of risk, earnings, and investment fees.

Other than the traditional investment options, many Solo 401(k) plan owners also choose the plan for the ability to invest in alternative assets, including real estate, private placements, precious metals, and more.

With the recent economic downturns, many investors express the needs to be in control of their retirement funds and able to diversify to mitigate the risks. With the Solo 401k, plan participants have the options of diversifying their portfolios to include rental properties or mortgage notes, for example. Often, these types of investment assets provide steady, predictable incomes, and are considered low-risk with a property as collateral.

Most importantly, as the plan owner is acting as the fiduciary, he or she can be sure that the plan is invested for his or her own best interest. There is no third party involved, meaning no conflict of interest.

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