Schwab Eliminates Account Service Fees for Small Business Plans
17 November 2005 - 1:00AM
PR Newswire (US)
Latest Price Cut and New Awareness Campaign Aim to Encourage the
Self-Employed and Small Business Owners to Ramp up Retirement
Saving SAN FRANCISCO, Nov. 16 /PRNewswire-FirstCall/ -- Charles
Schwab & Co., Inc. today announced it is eliminating account
service fees on retail defined contribution retirement plans for
small business owners and the self-employed effective October 1,
2005(1). These plans include Individual 401(k) plans, 403(b)(7)
plans, Qualified Retirement Plans (profit sharing and money
purchase pension plans), Keogh plans, SEP-IRAs, and SIMPLE IRAs(2).
The fee elimination does not apply to retirement account services
offered through Schwab Institutional or Schwab Corporate Services,
which, respectively, provide trading and custody services to
independent investment advisors, and corporations and third party
administrators. Schwab's decision to eliminate these fees comes at
a time when many business owners, with and without employees, are
considering whether to open a retirement plan. Most small business
retirement plans must be established by December 31 in order to
take advantage of tax benefits for the current year. Despite the
extensive menu of choices for these plans, many small business
owners aren't taking advantage of the retirement plan options
available to them. A recent study by the National Federation of
Independent Businesses, the nation's largest small-business
advocacy group, found that 38 percent of small business owners in
the U.S. are, in their own estimation, "behind schedule" in terms
of retirement(3). Roughly 70% of Schwab's retail small business
clients are owner-only businesses. "Many small business owners just
aren't aware of the great retirement plan options available to
them, whether they're contractors or consultants, owner-only firms,
or small businesses with employees," said Traci Siegel, vice
president for retirement and education products at Schwab. "These
plans offer a world of flexibility. There's a retirement plan
solution available for almost every small business owner --
regardless of whether it's someone just starting out as a
self-employed consultant or someone with a more mature business who
needs to play catch-up." In addition to eliminating fees, Schwab
has stepped up its efforts to raise awareness and educate small
business owners about their retirement plan options. A newly
published comprehensive Guide to Small Business Retirement Plans
available at http://www.schwab.com/gettheguide offers an
easy-to-use decision tree to help small business owners decide
which plan may be best for them. Information on Schwab's small
business products and services is also available at
http://www.schwab.com/smallbusiness or by calling 1-877-279-4606.
"We're doing everything we can to encourage small business owners
to step up their saving," added Siegel. "And with less than two
months left in the year, we want to make it as easy as possible for
them to open the retirement plan that's right for them so they take
advantage of the tax benefits for 2005." Schwab's decision to
eliminate account service fees on small business retirement plans
follows last month's removal of account service fees on U.S.
individual brokerage accounts. The announcement furthers a
commitment to value and simplified pricing that Schwab launched in
May 2004 and represents the eighth price cut for Schwab clients
since that time. About The Charles Schwab Corporation The Charles
Schwab Corporation (NYSE / Nasdaq: SCH), through its operating
subsidiaries, provides securities brokerage and financial services
to individual investors and the independent investment advisors who
work with them. With more than 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. Its subsidiary Charles Schwab & Co., Inc.
(member SIPC) provides a complete range of investment services and
products, including an extensive selection of mutual funds;
financial planning and investment advice; retirement plans;
referrals to independent fee-based investment advisors; and,
through Schwab Institutional, a division of Charles Schwab &
Co., Inc., offers custodial, operational and trading support for
independent fee-based investment advisors. The Corporation's
subsidiary Charles Schwab Bank, N.A. (member FDIC) provides banking
and mortgage services and products. The Corporation's subsidiary
Schwab Corporate Services provides services to retirement plan
sponsors and participants. The Corporation's other operating
subsidiaries include U.S. Trust Corporation and CyberTrader(R),
Inc. (member SIPC). These companies' Web sites can be reached at
http://www.schwab.com/, http://www.schwabbank.com/,
http://www.ustrust.com/ and http://www.cybertrader.com/.
(1105-9694) Plan Type Old Fees New Fees SEP-IRA $50 per year NONE
If account balance less than $10,000 SIMPLE IRA $50 per year if
account NONE balance less than $10,000; $100 per year plan level
fee if plan assets less than $50,000 - Individual 401(k) $45 per
year if account NONE balance less than - 403(b)(7) $100,000 -
Qualified Retirement Plan (profit sharing, money purchase) - Keogh
(1) Account service fees are periodic fees automatically charged to
accounts that fail to meet asset, trading or other published
thresholds. Other fees, such as transfer of account fees, still
apply. Account service fee elimination excludes Company Retirement
Accounts (CRAs) and accounts of clients residing outside the U.S.,
its territories or possessions. (2) Plan level fees, in addition to
individual account service fees, are also being eliminated on the
SIMPLE IRA. (3) National Small Business Poll, Retirement, Volume 5,
Issue 3 (2005). DATASOURCE: Charles Schwab CONTACT: Sarah Bulgatz
of Charles Schwab, +1-415-636-5940, or Web site:
http://www.schwab.com/
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