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 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

What are the fees and commissions?

  • Variable fees starting at $2,250 for setup, plus annual service fees
  • Commissions: $0 per online listed equity trades;1 $0 per Schwab ETF online trade in your Schwab account.2

There are no fees to open or maintain your account. Other fees may apply; please see the fee schedule found on the second page of the Funding Proposal Worksheet.

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 800-694-9449.

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 800-649-9449 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 Earnings grow tax-deferred and are taxable when withdrawn.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. 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 plan 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.

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

Take the next step.

Open a personal defined benefit plan today. Get detailed instructions above in Establish your plan.

Or call 800-694-9449 to speak with a Schwab investment professional.

See all Schwab accounts.