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 is optional, and participant loans are not permitted.
401k Taxation
Schwab directly offers its solo 401k in both Traditional and Roth versions. Traditional employee salary deferrals are generally made on a pre-tax basis, while traditional employer profit-sharing contributions are generally deductible by the business. Roth contributions are made on an after-tax basis, and qualified Roth withdrawals can be tax-free.
The business 401k at Schwab can also offer Traditional and Roth contributions. Employee Roth contributions are made with after-tax dollars. Employer contributions are generally made on a pre-tax basis, although a plan can also permit Roth employer contributions.
Employment Requirements
Schwab’s self-employed 401k, as the name suggests, does require some type of self-employed work. More specifically, the plan is available to self-employed individuals and business owners, including sole proprietors, owner-only corporations, partnerships, and independent consultants with no employees other than a spouse.
The business 401k, on the other hand, can be opened by a business of any size, 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 eligible employee participates in the plan. The self-employed 401k operates similarly, except that the business owner fills both the employer and employee roles for contribution purposes.
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 their own investment decisions. Schwab is restricted from providing investment advice on PCRAs, although the retirement plan may allow an independent investment advisor to manage the account.
Charles Schwab 401K Investment Options
A 401k at Schwab can provide access to a wide variety of investment products, depending on the type of plan and its rules.
These include stocks, options, ETFs, closed-end funds, mutual funds, and fixed-income securities.
Unfortunately, a 401k at Schwab cannot be set up as a robo account. However, a solo 401k can be opened as a full-service investment-advisory account, and this system would be a really good option for self-employed persons who aren’t comfortable managing this type of account or making investment decisions. Schwab has a large network of independent but affiliated investment advisors around the country, and these financial advisors can be used for Schwab’s solo 401k.
Charles Schwab 401k Pricing
The solo 401k at Schwab has no opening or recurring maintenance fees. There is also no minimum funding level; a 401k plan or account can be opened with $0. A full transfer of assets out of Schwab costs $50. This is very competitive pricing, especially by 401k standards.
Once the solo 401k is open, it is subject to the same commission schedule as other accounts, which means online trades of U.S. exchange-listed stocks and ETFs are commission-free. Many mutual funds also have zero loads and zero transaction fees. Some bond trades are commission-free as well. Options cost 65¢ per contract.
The business 401k is a different story. Schwab lists $0 account opening and maintenance fees and a $0 account minimum, while other plan fees vary based on the needs of the business and the services selected. 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 digital.
To establish a Schwab Individual 401k, you will need an Employer Identification Number (EIN), although a Social
Security Number (SSN) can be used when an eligible sole proprietor uses an SSN for the business.
Once you have the appropriate tax identification number, 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 participant section can use a Social Security Number.
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 from another brokerage firm into a like-titled Schwab Individual 401k. For a rollover from a 401k sponsored by a previous employer, you should first establish the appropriate Schwab account and then contact the previous employer’s plan administrator to arrange the rollover.
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. The rollover is initiated through the outgoing plan administrator this time. If you’re self-employed and functioning as the plan administrator, you shouldn’t have any problems getting permission to transfer assets out of the 401k. This distribution form should be used in this situation to move the 401k assets into the new IRA. As always, be sure to consult with a licensed tax advisor before performing a transfer or rollover.
Written by Alex Bost
Updated on 8/29/2026.
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