Schwab Introduces Individual 401(k) Plan
December 07 2004 - 7:45AM
PR Newswire (US)
Schwab Introduces Individual 401(k) Plan New Plan Completes
Schwab's Retirement Product Offering for Small Business Owners and
the Self-Employed SAN FRANCISCO, Dec. 7 /PRNewswire-FirstCall/ --
Charles Schwab & Co., Inc. ("Schwab"), the brokerage subsidiary
of The Charles Schwab Corporation (NYSE/Nasdaq: SCH), today
announced the availability of a basic Individual 401(k) plan for
owner-only businesses and the self-employed. Along with its
SEP-IRA, SIMPLE IRA, Profit-Sharing Plan, and the new Personal
Defined Benefit Plan introduced last year, Schwab now offers a full
suite of retirement plan solutions for small business owners and
the self-employed. Schwab offers a free Small Business Retirement
Consultation to help individuals determine which plan may be best
for them. "Because it's relatively new, the Individual 401(k) is
still something of an undiscovered secret," said Traci Siegel, vice
president/retirement and education products for Schwab. "This plan
is ideal for individuals who have the ability to maximize
contributions to a retirement plan, but who also may want to
contribute different amounts each year and need an
easy-to-administer, low-cost plan." "Many of the independent
investment advisors we serve through Schwab Institutional have
clients who are small business owners or self-employed," added
Cathy Clauson, vice president/wealth management services for Schwab
Institutional. "Our new Individual 401(k) gives those advisors a
better, more convenient way to meet their clients' retirement
planning needs." The chief benefits of the Individual 401(k) are
that the plan allows high contributions, contribution flexibility
and low cost. -- An individual can generally contribute more to an
Individual 401(k) than to other types of retirement plans. In
addition to contributing up to 25 percent of compensation (20
percent if self-employed), the individual can make an additional
elective salary deferral of up $13,000 in 2004, for a combined
maximum contribution of $41,000. For 2005, the salary deferral will
increase to $14,000 up to a combined total of $42,000. Individuals
age 50 or older also have the ability to make an additional
catch-up contribution of $3,000 this year ($4,000 for 2005). --
Individuals can change contributions to the Individual 401(k) from
year to year. -- There are no set-up costs. For accounts at Schwab
with balances of less than $100,000, there is a low annual fee of
$45 to administer the plan. Clients of advisors served by Schwab
Institutional are not charged any fee. Plan participants direct how
the contributions are invested and may choose from a wide range of
mutual funds, stocks and bonds available through Schwab. All
contributions vest immediately. An Individual 401(k) plan may be
adopted by a business that employs only the owner (including
corporations, sole proprietors and partnerships) and his or her
spouse. The Individual 401(k) was enabled by the Economic Growth
and Tax Relief Reconciliation Act of 2001 (EGTRRA). EGTRRA changed
the rules so that salary (elective) deferral contributions are not
counted toward the employer's deductible contribution limit, thus
allowing a higher percentage of total compensation to be
contributed on a pre-tax basis, and making the 401(k) plan an
attractive alternative for many owner-only businesses. About
Charles Schwab The Charles Schwab Corporation, through its
operating subsidiaries, provides securities brokerage and financial
services to individual investors and the independent investment
advisors who work with them. With over 7 million individual
investor accounts and more than $1 trillion in client assets, The
Charles Schwab Corporation is one of the nation's largest financial
services firms. Schwab provides a complete range of services and
products, including an extensive selection of mutual funds;
financial planning and investment advice; retirement plans; banking
products and services; and referrals to prescreened independent
fee-based investment advisors. Schwab is also the leading provider
of custodial, operational and trading support for independent
fee-based investment advisors. In addition to providing retirement
product solutions for small business owners and the self-employed,
Schwab also offers a broad array of workplace financial benefits to
employers of all sizes through Charles Schwab Corporate Services,
including defined contribution plans, defined benefit plans, equity
compensation plans and nonqualified deferred compensation plans.
The corporation's operating subsidiaries include: Charles Schwab
& Co., Inc. (member SIPC), U.S. Trust Corporation (member
FDIC), CyberTrader(R), Inc. (member SIPC), and Charles Schwab Bank
(member FDIC). These companies' Web sites can be reached at
http://www.schwab.com/, http://www.ustrust.com/,
http://www.cybertrader.com/, and http://www.schwabbank.com/,
respectively. (1204-12669) DATASOURCE: Charles Schwab & Co.,
Inc. CONTACT: Sarah Bulgatz of Charles Schwab & Co., Inc.,
+1-415-636-5940, or Web site: http://www.schwab.com/
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