Unfortunately, Robinhood does not offer Individual (Solo) 401K or any other self-employed accounts at this time. The only retirement accounts available on Robinhood are
Traditional IRA and ROTH retirement accounts. For a $0 commission Individual (Solo) 401K provider, consider
Charles Schwab Brokerage.
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Overview of Charles Schwab's Individual 401(k)
If you're self-employed and don't have access to a company-sponsored 401(k) plan, you might want to consider opening a solo 401(k). Several online brokers offer this type of retirement account, including Charles Schwab, which has a very competitive fee schedule. Let’s take a closer look.
Opening an Individual 401(k) at Charles Schwab
Charles Schwab has a user-friendly website where you can open a self-employed 401(k) online. Simply
go to the website, then click the "Invest Now" button. In the list of accounts on the left, select Retirement, then Individual 401(k), and finally, Open an Individual 401(k) Account.
You'll be guided through online forms that you need to fill out. Pay special attention to areas like naming a trustee, eligibility service requirements, and whether you want the plan to allow loans in the future.
Roth vs. Traditional
You can choose to open either a Traditional 401(k) or a Roth 401(k). A Traditional 401(k) allows for pre-tax contributions, meaning the funds are deducted from your paycheck before taxes, reducing your taxable income. However, withdrawals will be taxed because the contributions were not taxed initially.
A Roth 401(k), like a Roth IRA, accepts after-tax contributions, so these contributions are not tax-deductible. However, withdrawals are tax-free. According to IRS guidelines, if you open a Roth 401(k), you also need to open a Traditional 401(k). You’re not required to contribute to the Traditional account, but it will be available in your Charles Schwab online account if you decide to use it in the future.
Charles Schwab Individual 401(k) Specifics
The U.S. government has set certain rules for self-employed 401(k)s, which apply to plans held at Charles Schwab. The annual limit on employee deferrals is $19,500. If you're over 50, you can contribute an additional $6,000 per year.
You can also contribute as the employer. In this role, you can contribute up to 25% of your compensation. The maximum combined contribution (employee and employer) for a solo 401(k) in 2024 is $58,000.
Charles Schwab Individual 401(k) Fees
There is no annual fee for a 401(k) plan at Charles Schwab, nor is there any fee to close one. Additionally, there are no inactivity fees, low balance fees, or other ongoing charges. Paper statements cost $2 each, but e-statements are free. Paper and electronic trade confirmations are also free.
The same commission schedule that applies to taxable accounts at Charles Schwab also applies to non-taxable accounts, including $0 trades for stocks and ETFs.
Charles Schwab offers 4,200 mutual funds with no loads and no transaction fees. In total, the broker has 11,544 funds. If you sell a no-transaction-fee (NTF) fund within 180 days of purchase, there is a $49.99 fee. The transaction fee for other funds is also $49.99.
Retirement Resources
The Charles Schwab website has an excellent educational section, offering articles and videos on a wide range of topics. For example, you can find resources on fixed-income ETFs and stop-loss orders.
If you need help using Schwab's trading technology, there are videos that demonstrate how to use platforms and trading tickets in the educational section. There’s even a video on how to build a bond ladder, which could be ideal for a retirement account.
Charles Schwab's mutual fund screener returns 219 target-date mutual funds, most of which are no-load, no-transaction-fee funds. Fund families include BlackRock, T. Rowe Price, and American Century.
If you’re not confident managing your account, Charles Schwab offers in-house investment advisors who can manage your 401(k) for a small fee.
Charles Schwab Individual 401K Review Judgment
Charles Schwab offers a lot if you're looking for a broker to help you save for retirement. In addition to generous 401(k) policies, you can use advanced trading technology to buy and sell equities. If you have other accounts at Charles Schwab, you can access them all from a single login.
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Updated on 7/22/2024.
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