A fee of $50 per participant per year applies only to persons who select the SDBA route. Via a brokerage firm that you select, sophisticated investors have access to a whole world of choices: stocks, bonds, CDs, ETFs, and an expansive universe of mutual funds.
» no asset fee
» no advisory fee
» routine trading fees apply per your brokerage firm’s schedule
Note: Review program details for specific limits on your SDBA as a % of total plan assets
⦿ no limit on investment offerings as long as available in a 401k
⦿ freedom, accessibility with account access online, by phone, and through mobile apps
⦿ flexibility, control with the convenience of online trading and investment research tools
» Allow advanced investors to personalize by leveraging a variety of options
» Participants can manage their own investments and expenses via combined selections
» Customization by either imposing limits on how much participants may allocate, or by the types of investments available
⦿ Self-management vs. professional management
⦿ Owning an individual stock or bond does not give the diversification of a mutual fund
⦿ Federal rules require that plans offering a brokerage window option offer it to all in the plan, not just executives
So, while a SDBA requires a greater degree of prudence and understanding on the part of the participant, it can be a tactical addition in select conditions.
Let us know of your favorite brokerage firm. The administrator will do the rest with instructions for account setup and make it easy on your end.
Additional Disclosure: A self-directed brokerage account enables a Plan Sponsor to deliver an extra level of diversification and personalization to participants but adds certain responsibilities and liabilities in the Fiduciary capacity. As with any retirement asset investment option, the SDBA should be carefully reviewed prior to its addition in the Plan. The Sponsor should consider the pros and cons, associated trading fees, and participants’ educational needs accompanying the addition of a SDBA.
Not all investment types are available in a self-directed brokerage account, including but not limited to: options, purchases on margin, short sales, commodities, precious metals, collectibles, futures, currencies, and penny stocks.
