Individual 401(k) Plan —Traditional & Roth

If you're self-employed or run an owner-only business, you can make substantial contributions toward your retirement with an Individual 401(k) plan. It's easy to administer and has many of the same benefits as a conventional 401(k). Best of all, you direct how your contributions are invested. Schwab has added a new Roth feature to its I401(k) plan. Designated Roth salary deferral contributions are now allowed for 2024 tax year and beyond.

What are the Benefits of an Individual 401(k) Plan

Every Schwab account comes with one-on-one investment help and guidance. With this account, you'll also get:

  • Higher potential contribution limits than SEP IRA and profit-sharing plans.
  • Ability to make profit-sharing contributions and pre-tax and Roth salary deferrals.
  • Tax-deductible contributions and tax-deferred earnings on pre-tax contributions.
  • Tax-free distributions if qualified on designated Roth contributions. 
  • Flexible annual contributions.
  • Retirement planning tools and resources. 
  • 24/7 service and support.

You can also view additional Individual 401(k) information here.

Account Pricing

There is no fee to open or maintain an account at Schwab.

  • Minimum opening deposit: $0
  • $0 account open or maintenance fees. Other account fees, fund expenses, and brokerage commissions may apply1.
  • Trade commissions: $0 per online listed equity trades;2 $0 per Schwab ETF online trade in your Schwab account3 

Find out more about our fees and minimums.

Related Questions

Have questions about our Individual 401(k) plan? Here are responses to some of the most common questions we hear. If you have a specific question that’s not answered here, please call us at 866-855-6637.

Get detailed instructions in Establish Your Plan below.

An Individual 401(k) plan is available to self-employed individuals and business owners, including sole proprietors, corporations, partnerships, and tax-exempt organizations with no employees other than a spouse. You must have a minimum 5% business share to be eligible.

  • Contributions to a pre-tax Individual 401(k) plan are generally tax-deductible. 
  • For a pre-tax Individual 401(k) earnings grow tax-deferred and assets are not taxed until they are withdrawn. 
  • Designated Roth contributions are not deductible but are not taxed if over 59 1/2 and have been held for 5 years.

Plan accounts are funded with a combination of pre-tax and designated Roth salary deferrals and annual profit-sharing contributions. Vesting is immediate, and participants can direct how contributions are invested. Individual 401(k) plans do not need to be funded annually. SECURE Act 2.0 allows for Roth employer contributions, but further guidance from the IRS is needed.

Maximum employee elective deferral$23,000$22,500
Employee catch-up contribution (if age 50 or older by year-end)*$7,500$7,500
Defined contribution maximum limit, all sources$69,000$66,000
Defined contribution maximum limit (if age 50 or older by year end); maximum contribution all sources, plus catch-up$76,500$73,500

SECURE 1.0 and 2.0 allows unincorporated business owners to establish an Individual 401(k) by tax filing deadline plus extension. Salary Deferrals are due by tax filing deadline no extensions for new plans, while existing plans and profit-sharing plan contributions can be made up to tax filing deadline plus extension. If your business in incorporated, generally you need to make your deferral contributions in the same tax year.

You'll need to file IRS Form 5500 annually when your plan assets reach or exceed $250,000.

You must have a triggering event—generally either termination of employment or retirement—to take a distribution.

Pre-tax Individual 401(k)

  • Generally all withdrawals are subject to taxes.
  • Withdrawals before age 59½ may be subject to a 10% penalty. 
  • Distributions are subject to a mandatory 20% federal tax withholding, except for Required Minimum Distributions (RMDs), hardship withdrawals, certain qualified exceptions and direct rollovers. 
  • If you own 5% or more of the business, you must begin taking RMDs annually, starting with the year you reach age 73. If you don't make withdrawals, you may be subject to pay a penalty.

Under SECURE 2.0, if you don't take your RMD by the IRS deadline, a 25% excise tax on insufficient or late RMD withdrawals applies. If the RMD is corrected timely, the penalty can be reduced to 10%. Follow the IRS guidelines and consult your tax advisor.

Roth Individual 401(k) 
Qualified Distributions: Are always tax-free

  • You can start making qualified distributions from a Roth 401(k) once you have satisfied two conditions: You are age 59½ or older and you have met the five-year rule.

Non-Qualified Distributions: Earnings are generally subject to taxes

  • You are under 59½ and/or have not met the 5-year rule you may have to pay income tax and if under 59½ may incur a 10% penalty
  • Early withdrawals must include both contributions and earnings, prorated based on the ratio of contributions to earnings in the account. 
  • Earnings are subject to a mandatory 20% federal tax withholding. Except hardship withdrawals, certain qualified exceptions and direct rollovers.

SECURE 2.0 has eliminated RMDs for Roth 401(k)s starting in 2024.

You may not take loans from your Individual 401(k) account.

Please refer to the IRS page on Individual 401(k)s link for more information. 

Establish Your Plan

Follow these instructions for establishing and contributing to a Schwab Individual 401(k) plan. Note: To establish your plan, you will need an Employer Identification Number (EIN) or a Social Security Number (SSN) if a sole-proprietor is acceptable.

  1. Print and complete the adoption agreement. Complete both sections, the Adoption Agreement & the Trustee and Custodial Agreement. Retain a copy and return the signed original to Schwab.
  2. Review the basic plan document, which describes and governs your account, and keep it for your records.
  3. Print and complete your account application. Retain a copy and return the signed original(s) to Schwab.
  4. You will need to open a separate account for each, one for the Individual 401(k) and one for the Roth Individual 401(k).
  5. You are not required to open both, but if you choose to do so will need two account applications.
  6. If you are transferring or rolling over a Roth 401(k) from another provider, please complete the Roth Individual 401(k) Rollover/Transfer Data Form.
  7. Distribute the pricing guide to all participants.
  8. Optional: Review the benefits, features, and contribution eligibility of the plan.

Next Steps

After you've done your initial paperwork, here are the next steps.

The Plan Summary describes the plan benefits and eligibility requirements. Fill in the information and provide a photocopy of the completed document to each participant. Do not return this document to Schwab.

All participants, including the business owner, must complete the Elective Deferral Agreement to indicate the elective deferral amount to have withheld from compensation. Retain the original completed copy for your records and provide a photocopy to plan participants. Do not return this document to Schwab.

Send one check made payable to Charles Schwab & Co., Inc., FBO "Your Company Name" along with a letter listing the exact amount to be deposited per account number and the plan year for which you are contributing. Be sure your check total matches the total amount of participant contributions. Mail your check to one of the addresses below:

Charles Schwab & Co., Inc.
P.O. Box 628291
Orlando, FL 32862-8291

Charles Schwab & Co., Inc.
P.O. Box 982600
El Paso, TX 79998-2600

Use the Contribution Transmittal Form to record contributions to your participant accounts, including the business owner's.



  • Take the next step.

    Ready to establish a Individual 401(k) plan? Get detailed instructions above in Establish Your Plan.

    Need help? Call 866-855-6637.

    See all Schwab accounts.