Personal Defined Benefit Plan
Schwab's Personal Defined Benefit Plan helps self-employed and small business owners save aggressively for retirement by allowing you to make very high contributions. Just target a desired level of retirement income, and contribution amounts are adjusted each year to help you reach your goal.
What are the fees and commissions?
- Variable fees starting at $2,250 for setup, plus annual service fees
- Commissions: $0 per online listed equity trades1; $0 per Schwab ETF online trade in your Schwab account2
There are no fees to open or maintain your account. Other fees may apply; please see Account Pricing.
What do I get with this defined benefit account?
Every Schwab account comes with one-on-one investment help and guidance. With this plan, you’ll also get:
- A customized funding proposal
- High contributions that are generally 100% tax-deductible, within IRS limits.
- A predetermined benefit at retirement
- Expert recordkeeping and plan service
- Retirement planning tools and resources
The following fees apply to the Schwab Personal Defined Benefit Plan:
- Variable fees based on the total number of participants, starting at $1,750 for one person
- Annual service fees based on the total number of participants, starting at $1,750 for one person
- Plan termination fees
- Trade commissions: $0 per online listed equity trades;1 $0 per Schwab ETF online trade in your Schwab account2
|Type of Business||One person only||Key employees only*||Employers with staff*|
|Starting a new Schwab Personal Defined Benefit Plan||Setup fee: $2,250||Setup fee: $2,250||Setup fee: $2,250|
|Annual service fee: $1,750||Annual service fee: $2,000||Annual service fee: $2,600 for up to 3 participants. $3,000 for 4-5 participants.|
Have questions about our Personal Defined Benefit 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 800-435-4000.
This plan can take up to three months to set up, so you’ll want to start early. The first step is to complete a complimentary Funding Proposal Worksheet. Schwab must receive the form by November 15 in order to establish a plan effective for the current year.
Call us at 800-435-4000 anytime for assistance.
A Personal Defined Benefit Plan may be best for professionals age 50 or over who can make annual contributions of $90,000 or more for at least five years and who have few, if any, employees. It's for people who are looking for a quick way to increase their retirement assets, most likely highly compensated business owners, partners, and key employees who are in their peak earning years.
Contributions are generally 100% tax-deductible, within IRS limits. Earnings grow tax-deferred and are taxable when withdrawn.
A Personal Defined Benefit Plan is funded with employer contributions only and must be funded annually. Annual contribution levels are calculated based on several factors, including age, compensation, and retirement age. If you have employees, you must contribute for all eligible employees.3 Plan contributions are adjusted each year and may be amended (for additional fees) if the desired contribution level needs to be revised.
The plan must be opened by the end of your business's fiscal year (usually December 31) in order to make contributions for that tax year. To open your plan by year-end, make sure you complete and submit your Funding Proposal Worksheet by November 15. For plans with a January 1 through December 31 plan year, contributions must be made before you file your business's tax return for the year, but not later than September 15 of the following year.
While Personal Defined Benefit Plans have some of the highest contribution limits, there are also substantial costs and administrative requirements based on the terms of your plan, including annual actuarial calculations, required annual funding, and filing fees for IRS Form 5500.
Penalty-free distributions may be received upon retirement or termination of service. Required Minimum Distribution (RMD) withdrawals must begin by age 73, even if you are still working. You may receive your benefit payout by rolling assets into an IRA, setting up an annuity, or receiving a lump-sum distribution. If you don't start RMDs when required or take less than the required amount, you will face a penalty.
If you don't make withdrawals, you'll be subject to pay a penalty.
The new SECURE 2.0 reduces the 50% penalty for missing an RMD effective for RMDs in 2023, it does not impact missed RMDs in 2022. 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 down to 10%. Follow the IRS guidelines and consult your tax advisor.
There are certain circumstances in which you may be eligible to withdraw funds before age 59½ without taking a 10% penalty, including:
- Rollover of distributions to another IRA or employer plan
- Termination of employment at or after age 55
- Death or disability
- Qualified birth or adoption expenses
- Non-reimbursed medical expenses exceeding 7.5% of adjusted gross income
- Withdrawals made in equal installments over the account holder’s life expectancy
Our dedicated team of actuaries will design a detailed customized funding proposal to give you the information you need to decide if this plan is right for you. Next, Schwab will contact you to review your proposal and work with you to establish your account. Follow these instructions to receive your complimentary funding proposal. Need help? Call 800-435-4000.
- Download and read the Schwab Personal Defined Benefit Plan fact sheet.
- Download and read our Q&A Guide.
- Download, print, and fill out the Funding Proposal Worksheet.
- Return your completed Schwab Personal Defined Benefit Plan Funding Proposal Worksheet to Schwab.
Schwab Personal Defined Benefit Department
Charles Schwab & Co., Inc.
P.O. Box 407
Richfield, OH 44286-0407