If you’re running a side business or working for yourself full-time, saving for retirement on your own can feel overwhelming. A Solo 401k may help you set aside meaningful dollars and lower your taxes at the same time.
In 2025, Charles Schwab continues to offer a Solo 401k with no setup or annual fees, which makes it a popular choice for self-employed individuals who prefer to invest through a brokerage platform.
This article breaks down what you need to know about Schwab’s Solo 401k — its features, costs, and whether it might be a fit for you.
📌 Also Read: Can You Have Both a Solo 401k and a Regular 401k? Rules & Contribution Limits
The Solo 401k Handbook
Everything you need to know about the most powerful retirement plan for business owners and the self-employed.
Who Can Open a Charles Schwab Solo 401k?
Not everyone qualifies for a Solo 401k. Charles Schwab follows standard IRS eligibility rules for Solo 401k plans:
✅ You must earn self-employment income.
This can include income from freelance work, a side business, or a full-time business you run as a sole proprietor, partnership, LLC, or corporation. Even if you also have a job elsewhere, you may still be eligible if your self-employed work generates income.
✅ You cannot have full-time employees.
Solo 401k plans are meant for business owners with no full-time employees other than themselves and their spouse. A full-time employee is generally someone who works 1,000 hours or more in a year.
✅ Spouses can join the plan.
If your spouse earns income from the same business, they can open a participant account under your Schwab Solo 401k. This could potentially double your household’s contribution capacity.
📝 Note: If you hire an employee who works 1,000 hours or more in a year and becomes eligible for a retirement plan, your Solo 401k may need to be converted into a different type of plan that covers additional participants.
Charles Schwab Solo 401k Contribution Limits (2025)
Charles Schwab follows the IRS guidelines for Solo 401k contributions, which means you’re treated as both the employee and the employer. That gives you two ways to contribute and potentially maximize your retirement savings.
Here’s how the 2025 limits break down:
✅ Employee Contribution: Up to $23,500 in salary deferrals.
✅ Catch-Up Contribution: Add $7,500 more if you’re age 50 or older.
✅ Employer Contribution: Up to 25 percent of your compensation, based on how your business income is calculated.
✅ Combined Contribution Limit: Up to $70,000 if you’re under age 50.
✅ With Catch-Up (Age 50+): Up to $77,500 total.
📝 Note: Your income needs to support these limits. For sole proprietors and partnerships, this usually means net earnings after the self-employment tax deduction. For S corporations, the 25 percent applies to your W-2 wages.
📌 Also Read: Solo 401k Contribution Limits & Deadlines for 2024 & 2025
Charles Schwab Solo 401k Plan Features
✅ Traditional and Roth Contributions: You have the option to make contributions on a pre-tax (Traditional) or after-tax (Roth) basis, providing flexibility in managing your taxable income.
✅ Flexible Annual Contributions: There is no requirement to contribute every year, allowing you to adjust your contributions based on your business’s financial performance.
✅ Diverse Investment Options: You can choose from a wide range of investment options available through Schwab’s brokerage platform, including stocks, bonds, mutual funds, and ETFs.
✅ 24/7 Customer Service: Schwab offers round-the-clock customer support to assist you with your account and investment needs.
✅ Online Account Management: Manage your Solo 401k account online, including making contributions and monitoring your investments.
📝 Note: While Schwab provides a robust platform for managing your Solo 401k, it’s important to consult with a tax advisor to understand the specific tax implications for your situation.
Solo 401k Investment Options at Charles Schwab
Charles Schwab’s Solo 401k gives you a broad choice over how your retirement dollars are invested. You direct the account and may pick from Schwab’s full brokerage lineup.
✅ Almost any asset type
You may invest in stocks, mutual funds, ETFs, bonds, certificates of deposit, and options—as long as they’re available through Schwab’s platform.
✅ Fractional-share trading
You could buy partial shares of many stocks or ETFs with as little as $1, which may help you put meaningful dollars to work right away.
✅ Research tools and support
You would potentially benefit from Schwab’s screeners, market commentary, and one-on-one investment help—though human advice is limited to technical support.
❌ No direct real estate or private-fund investments
Unlike some self-directed plans, Schwab’s Solo 401k does not allow you to hold real estate, private loans, or private funds.
❌ Excluded assets
You generally cannot invest in life insurance policies or employer securities under this plan.
Fees and Pricing
Charles Schwab keeps its Solo 401k simple and low cost. There’s no setup fee and no annual maintenance fee, which makes it a practical choice for self-employed individuals who want to invest through a traditional brokerage account.
Here’s a look at what you might pay, depending on how you invest:
✅ Stocks and ETFs: $0 per online trade
✅ Options: $0 per trade, plus $0.65 per contract
✅ Schwab mutual funds: No transaction fees
✅ Other mutual funds: May charge a $49.95 buy fee
✅ Bonds (secondary market): $1 per bond, with a $10 minimum and $250 maximum per trade
❌No loan option: Schwab doesn’t offer participant loans through its Solo 401k plan, so there are no loan-related fees to worry about.
📝 Note: All fees are current as of January 2025 and may change. You can check the most recent Schwab Pricing Guide for updates.
📌 Also Read: Form 5500-EZ Filing Requirement for Solo 401k Plans Over $250,000
Charles Schwab Solo 401k Pros and Cons
Pros
✅ $0 account setup and maintenance fees and online stock/ETF trade fees
✅ Access to Schwab’s thinkorswim platform for live trading
✅ Access to Schwab’s Mutual Fund OneSource, offering 4,000+ no-load, no-transaction-fee mutual funds
✅ 24/7 live phone support and access to nationwide branches for document drop-off
Cons
❌ No participant loan option
❌ After-tax contributions (for Mega Backdoor Roth) are not supported
❌ Plan forms must be submitted manually (paper or PDF), which may feel outdated
❌ Investments are limited to publicly traded securities; alternative investments like real estate and private equity are not permitted
Charles Schwab Solo 401k Key Takeaways
The Charles Schwab Solo 401k offers a low-cost retirement plan with strong brokerage access, flexible contribution options, and no annual fees. It may be a good fit if:
✅ You want to invest in public markets
✅ You value zero annual fees and broad asset access
✅ You don’t need a loan provision or alternative assets
It may not be ideal if you’re seeking to implement strategies like the Mega Backdoor Roth or invest in private funds or real estate.
📝 Next steps: Evaluate your income, tax situation, and retirement goals before selecting a provider. For tailored advice, consider speaking with a tax or financial advisor who specializes in retirement planning for self-employed individuals.
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Disclaimer:
The Carry Learning Center is operated by The Vibes Company Inc. (“Vibes”) and contains generalized educational content about personal finance topics. While Vibes provides educational content and technology services, all investment advisory services discussed on this website are provided exclusively through its wholly-owned subsidiary, Carry Advisors LLC (“Carry Advisors”), an SEC registered investment adviser. The information contained on the Carry Learning Center should not be construed as personalized investment advice and should not be considered as a solicitation to buy or sell any security or engage in a particular investment, accounting, tax or legal strategy. Vibes is not providing tax, legal, accounting, or investment advice. You should consult with qualified tax, legal, accounting, and investment professionals regarding your specific situation.
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