So now that we’ve set up your defined benefit plan or cash balance plan, what’s next?
Although your plan has been set up, you’re not finished yet. You now need to open up a custodial investment account with Schwab (or any custodian of your choice).
We have been setting up plans on the Charles Schwab platform for years. They have always been a great custodian to work with. You often get access to the same customer service representative throughout the entire application process. The representatives at Schwab are typically knowledgeable and easy to work with.
While the application process is very simple compared to other custodians, we do find that our clients often have a lot of questions. As such, we decided to do a post specifically on how to fill out the Schwab account application for a cash balance plan or defined benefit plan.
We are always here to help our clients. But make sure to contact Schwab upfront with any questions. They can help expedite the process.
Keep in mind that they get especially busy around year-end. The direct line for the team that specializes in Small Business Retirement accounts is 1-800-435-4000.
Opening Up Your Charles Schwab Custodial Account
To open your account with Charles Schwab, you will need to fill out the following application:
https://www.schwab.com/resource/cra-master-form
You will need to complete one application for your cash balance plan or defined benefit plan.
If you are setting up a 401(k) plan, you will need a separate application for that one as well. DO NOT OPEN UP ONLY ONE ACCOUNT AND DEPOSIT FUNDS FOR BOTH YOUR CASH BALANCE PLAN AND 401(K) PLAN INTO IT. Please contact us if you are confused.
As a side note, remember that for a solo 401(k) you can use one account for both the deferral portion and the employer portion.
Part 1 – Master Account Application
For the cash balance plan (or defined benefit plan) you will only need to complete one application. This will generate one pooled account.
We will follow right through the pages and point out some tips and tricks along the way. Please use the Application Attachment PDF in your SmartVault to use along the way.
Use EMPARION PLANS on
*Emparion is not affiliated with, endorsed by, or sponsored by these institutions.*
Section 1 – Company Information
In this section, enter information for the business sponsoring the retirement plan. The business sponsoring the plan is your business.
The following information is needed:
- Company Name
- Business EIN
- Entity Type (S-Corp, C-Corp, etc)
- State of Incorporation
- Country of Establishment
- Company Address / Mailing Address (if different)
- Phone number
Section 2 – Plan Details
This information is provided by Emparion in the Application Attachment PDF. You have access to this in your SmartVault account.
- Plan Name – This is the name of the plan in the adoption agreement. Do not use your company name or EIN.
- Plan EIN – This is the EIN for the plan. You can find your IRS letter containing the EIN in your SmartVault. DO NOT USE YOUR BUSINESS EIN.
- Type of Plan – Check or select “Defined Benefit“.
- Date Plan Established – This is found in your SmartVault document.
- Approximate Plan Assets – This is most likely $0.
- Number of Participants – You (and possibly your spouse) and any additional employees that we discussed receiving an allocation of your contribution.
Answer these questions as follows:
- Does your Plan document allow covered options trading? – NO
- Does the Plan allow participants to direct investments into their own accounts? – NO
- Does the Plan allow for segregated accounts/FBO? – NO
- If segregated accounts are allowed, does the Plan allow the Participants to trade directly with Schwab? – NO
Is a Cash Balance or Defined Benefit Plan Right For You?
Section 3 – Plan Sponsor
3a. Provide the 6-digit business code from the NAICS.
3b. Choose the option that shows the business’ activity plus additional information as requested.
Sections 4 – Trustee Information
This is where you, as the owner, enter your information. If you added your spouse as a co-trustee of the plan, meaning they signed the plan document as well, then you can enter their information in the co-Trustee information as well.
Optional Questions – Marital status, Investment Experience, Annual Income, Liquid Net Worth.
Co-Trustee – This is only if they signed the Emparion documents.
– If yes, complete the remaining Section 4.
– If not, continue to Section 5.
Section 5 – Investment Objective
We recommend selecting Capital Preservation.
Section 6 – SKIP (if you selected “Defined Benefit” in Section 2)
Section 7 – Account Features
Section 8 – Paperless Document Enrollment
Section 9 – Optional Checks
Section 10 – Certification of Trust
Section 11 – Authorization to Open Account
The certification box must be checked.
Charles Schwab requires signatures and dates to be signed in ink.
Sections 12-13 – DO NOT ADD EMPARION
Please remember: This is meant to be used for guidance purposes only. Charles Schwab will need to review and accept the application.
Part 2 Participant Application
For 401K plans with more than one participant, a participation application will need to be submitted for each participant that is eligible to participate in the account. We recommend that the Master Account Application is submitted 1st and completely processed before submitting the individual participant applications. Click the link below to access the application:
Company Retirement Account Participant Application
On page 1 of the Participant Application, before section 1, are the following questions:
Provide Trust Tax ID: Include here the EIN for the plan. You can find your IRS letter containing the EIN in your SmartVault. DO NOT USE YOUR COMPANY EIN HERE.
Provide Plan Master Account Number: This number is received once the Master Account Application is processed with Schwab.
Participant Information
In this section, enter information for the corresponding participant,
Page 1
- Name (first, middle, last)
- Address
- Phone Number
- Email Address (Required)
- Social Security Number
- Date of Birth
- Mother’s Maiden Name
- Identification Type (Passport, Driver’s license)
- Identification Number
- State of Issuance
- Expiration Date
- Countries of Citizenship (must List all)
- Country of Legal Residence
Page 1: Securities industry regulations
- Employment status
- Name of Employer
- Occupation
- Employer Address
- Affiliation Questions
Page 2: Participant Information Continued
- Marital Status
- Number of Dependents
- Investment Experience
Trusted Contact Designation
This is an optional section of the application. The plan’s participant can designate up to 2 individuals that will act as a point of contact for the account. The individuals will not have authority to view the account or execute transactions. The primary purpose of the trusted contact is to address possible activities that might indicate financial exploitation of the participant.
Information requested:
- Name (First middle last)
- Relationship
- Address
- Phone Number
- Email Address
Overall Investment Objective
Select 1 check box option.
Participant Signature
It’s as simple as that! Just make sure to get your plan funded before the deadline. You can always reach out to us if you need additional help.
