The True Path to Total Financial Freedom
So now you, the savvy informed investor, know that 401Ks are superior in every way during the accumulation phase of your retirement planning. You call around to a number of firms that will provide you the documents you need to establish your plan. Then you find that somewhere in the contracting, you've appointed the firm as your Third Party Administrator (TPA). Some how, the fact that this was completely unnecessary got overlooked. To make matters worse, part of the firm becoming your TPA, allows them to open an account for you, and your retirement money will be transferred to them. Then you find out, if you want to fire them, there is a fee to discharge them. If you dissolve the plan, you can get all your money back, but if you just want to change or eliminate the TPA, it will cost you.
American Pension Service was an IRA custodian and also facilitated setting up 401Ks. They were active in educating the public and promoting awareness of Self Directed Retirement Plans.
As good as they were, they still succumbed to the allure of the on-going trail of money that developed from being a Third Party Administrator (TPA). Even though they trained people in the superiority of 401Ks, they still set themselves up to act as TPAs. They also succumbed to the allure of investing other people's money. Aside from commingling funds, APS engaged in some other questionable activities. The SEC stepped in and froze operations. In freezing operations, they also froze all accounts holding clients' assets.
An associate of mine had opened a 401K through APS. When he asked if he needed to transfer his 401K to me, we told him that 1.) We don't act as a TPA, so there was no transfer possible; 2.) His document for his 401K as drawn up by APS was perfectly fine and; 3.) There was no need to have his money tied up by APS. His document provided for him to act as his own trustee, thus he could discharge APS and set himself totally free.
The SEC stepped in and froze APS' assets when the fraud was discovered. This included Mike's assets as well as all the other clients that had APS act as a custodian and a TPA. Since Mike had loans outstanding against his real estate owned in his 401K, he had difficulty paying investors who had lent him money.