Charles Schwab 401k Plan Overview
Among its many investment services, Charles Schwab offers 401k plans. If you’re paying hundreds of dollars every year to maintain your 401k elsewhere, you really need to check this out.
Available Charles Schwab 401k Versions
Schwab has two 401k modes: individual and business. The individual 401k, also known as a self-employed or solo 401k, is designed for owner-only businesses with no employees, other than a spouse. The business 401k is intended for operations larger than this.
Schwab will act as the custodian for an individual 401k plan. A trustee may be used, and loans are not permitted.
401k Taxation
Schwab offers the solo 401k with both the Traditional and Roth tax setups. With the traditional setup, contributions are generally made on a pre-tax basis. With the Roth setup, contributions are made with after-tax dollars, and qualified withdrawals can be tax free.
The business 401k at Schwab can also use either the Traditional or Roth system. In these plans, employee salary deferrals are generally pre-tax unless the plan permits Roth contributions. Employer contributions follow the plan’s rules and applicable tax treatment.
Employment Requirements
Schwab’s self-employed 401k, as the name suggests, does require some type of self-employed job. More specifically, self-employed individuals and business owners, including sole proprietors, owner-only corporations, partnerships, and independent consultants with no employees other than a spouse, are eligible for the plan.
The business 401k, on the other hand, can be opened by a small or large business, even a mega-cap corporation, and employees of the business can contribute via salary deferrals. The business can also make contributions to its 401k accounts as the employer.
Technically, the 401k plan is created by the business, and each employee opens a 401k account under the plan. The self-employed 401k operates this way as well. The employee and the business are simply the same entity in this situation (although they could have different tax IDs, as we shall see in the account-opening section below).
Charles Schwab Personal Choice Retirement Account
The business 401k plan can offer Personal Choice Retirement Accounts (PCRAs) to its employees. The PCRA is a self-directed brokerage account that resides within the 401k plan. Assets can be transferred from the plan into the PCRA where employees make all investment decisions. Schwab does not act in any advisory capacity on a PCRA.
Charles Schwab 401K Investment Options
A 401k at Schwab of either version, solo or business, can invest in a wide variety of investment products.
These include stocks, options, ETFs, closed-end funds, mutual funds, and fixed-income securities.
Schwab’s 401k offerings focus more on self-directed investing and plan-based guidance than on a simple off-the-shelf robo setup. For business plans, managed-account services may be available depending on the plan design.
Charles Schwab 401k Pricing
The solo 401k at Schwab has no opening, recurring, or closeout fees. There is also no minimum funding level; a 401k plan or account can be opened with $0. This is excellent pricing, especially by 401k standards.
Once the solo 401k is open, it is subject to the same commission schedule as other accounts, which means trades of U.S.-listed stocks and ETFs are free of any commissions. Many mutual funds also have zero loads and zero transaction fees. Some bond trades are commission-free as well. Options cost 65¢ each.
The business 401k is a different story. Fees and minimums vary and are related to the needs of the business. Apparently, they will be negotiated with Schwab. The retirement-plan provider could charge an account maintenance fee for the PCRA.
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Opening a 401k at Schwab
Opening a self-employed 401k at Schwab or any other investment firm is a much different process than
opening a simple taxable brokerage account or even an IRA. A 401k requires a lot of paperwork, and it
usually isn’t fully digital.
Previously, the Internal Revenue Service permitted self-employed 401k plans to be opened with a Social
Security Number. Schwab currently states that a solo 401k plan can be opened with an Employer
Identification Number (EIN) or a Social Security Number (SSN) if you are an acceptable sole proprietor.
Once you have the EIN or SSN, the adoption agreement needs to be completed and submitted to Schwab. This will
get the plan established. The pdf form is fillable, so it can be saved for later use. It’s important to get everything on this form correct. Otherwise, it will have to be resubmitted, further increasing the time required to get the solo 401k open.
After the adoption agreement has been filled out, it’s time to complete an application for a solo 401k account. This will get an actual account open. It also is a fillable form. The employer’s information goes into section 1, while the employee’s details go into section 2. Because we’re dealing with a self-employed setup here, there will probably be some overlap between both sections. The second section, but not the first, can use a Social Security Number, if desired.
When finished, both documents must be submitted to Schwab. They can be submitted together, or the account application can be turned in after the adoption agreement. There are several methods to submit these two documents after they have been printed off and signed:
- Fax
- Website upload (look for the Messages icon in the upper-right corner)
- Drop off at a Schwab branch location
- Snail mail
To open a business 401k, you must call Schwab at 877-456-0777 and go from there.
Software and Trading Tools
Once the 401k account is up and running, it will have access to the same resources that other Schwab accounts have. These digital tools include:
- User-friendly website with lots of useful educational and research materials
- Web-based trading platform (thinkorswim)
- Desktop programs (thinkorswim)
- Two mobile apps (regular and thinkorswim)
- Platform for Apple Watch
Charles Schwab 401k Transfers
It’s possible to transfer an existing Individual 401k account from another financial institution into Schwab. The first step is to open an Individual 401k at Schwab and then complete the appropriate transfer paperwork. For like-titled transfers of an existing Individual 401k, Schwab uses its TOA process.
It’s also possible to rollover a 401k (from Schwab or any other provider) into an IRA at Schwab. Once again, the first step is to open the new account (an IRA in this case), then contact the 401k plan administrator and request a rollover into the IRA. If you’re working with a prior employer’s plan, Schwab says you should contact the prior plan administrator. As always, be sure to consult with a licensed tax advisor before performing a transfer or rollover.
Updated on 4/22/2026.
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