The Charles Schwab Solo 401k Plan is another free prototype solo 401k plan that offers free account set ups, free trades, and no maintenance fees. Being free does have its trade offs. You don’t get a Roth option, no ability to do a mega backdoor Roth, no access to alternative investments, and you still have to mail in a physical check to make a contribution.
Table of Contents
|Contribution limit||$61,000 for 2022, $66,000 for 2023|
|Catch-up contributions (if age 50+)||$6,500 for 2022, $7,500 for 2023|
|Investment options||Stocks, bonds, mutual funds, ETFs.|
|Contribution method||Mail in a check|
|Invest in alternative assets||No|
|Invest in crypto||No|
|Invest in real estate||No|
|Invest in private equity||No|
The Charles Schwab Solo 401k is completely free to set up your account. There are no maintenance fees, and you pay $0 per stock trade, with $0 on Schwab funds and ETFs.
Contribution limits and Roth
You can contribute up to $61,000 for 2022 and $66,000 for 2023. If you’re at least 50 years of age, you can contribute an additional $6,500 for 2022 and an additional $7,500 for 2023.
Charles Schwab Solo 401k only comes with a pre-tax account, and no Roth account, with no ability to do a mega backdoor Roth.
You can invest your solo 401k funds into traditional assets like stocks, bonds, mutual funds, and ETFs. You cannot invest in alternative assets like real estate, crypto, NFTs, precious metals, or private equity. If you want to invest in alternative assets, you’ll need to open a self-directed solo 401k.
Rollovers & Loans
You can rollover an existing 401k plan into Charles Schwab’s Solo 401k, but they do not allow rollovers from IRAs and other retirement plan types.
The Charles Schwab Solo 401k does not come with a loan option.
If you’re looking for a basic solo 401k plan with low fees, the Charles Schwab Solo 401k is a solid candidate. It’s free to open and maintain your account, and you can invest in most traditional assets without any fees.
However, because it’s a free solo 401k plan, it lacks many of the premium features that many people look for with a solo 401k. You don’t get a Roth option, you can’t do a mega backdoor Roth, you can’t take out a loan or rollover your IRA, and a lot of the paperwork still needs to be mailed in through snail mail. For example, to make a contribution, you have to write and mail a physical check to them.
If you’re looking for a premium solo 401k plan with the ability to invest in any asset class, contribute to a Roth solo 401k, do a mega backdoor Roth, and get access to a more intuitive, modern user interface, here’s a list of the best solo 401k plan providers. You can also check out the Ocho Solo 401k Plan, a supercharged solo 401k with transparent pricing and no fees on your assets under management.
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