Open a Schwab Individual 401(k) for your S-corp and have it ready for your first payroll deferral before year-end.
Written for owner-only S-corps. Follow the eight steps to set up the plan, open your pre-tax and Roth accounts, and make your first contributions.
Why Schwab
A Solo 401(k) lets an owner-only S-corp contribute twice: once as the employee through a payroll deferral, and again as the employer through profit-sharing. Schwab’s version costs nothing to open or maintain, accepts both pre-tax and Roth deferrals, and lets you hold low-cost ETFs, including Vanguard’s, commission-free.
That’s what this plan can hold for an owner paying a $16,000 W-2 salary: $14,776 deferred from the paycheck (everything left after FICA) plus a $4,000 profit-sharing contribution from the S-corp. The 2026 limits are $24,500 for deferrals and $72,000 in total.
| Feature | Schwab Individual 401(k) |
|---|---|
| Fees to open or maintain | $0 |
| Pre-tax deferrals | Yes |
| Roth deferrals | Yes, in a separate Roth account |
| Roth employer profit-sharing | No, always pre-tax |
| Plan loans | No |
| How it’s opened | Paper forms from schwab.com/forms |
What you’re actually setting up
A Solo 401(k) has two layers. The S-corp creates the plan, and you open your accounts inside it.
the plan
two accounts
The whole process at a glance
1. Prepare
Gather your business details and download Schwab’s forms.
2. Paperwork
Adopt the plan, apply for both accounts, sign your deferral election, and submit.
3. Fund
Add the deduction to payroll, deposit on time, and invest.
Your timeline
- Week 1Gather details, complete the forms, and submit them (steps 1–6)
- Weeks 2–3Schwab reviews the paperwork and opens your accounts
- Before December 31Run payroll with the deferral and deposit it within 7 business days (steps 7–8)
- By the S-corp’s return due dateMake the profit-sharing contribution (step 8)
Start by early November if you want deferrals for this year. Paperwork can take longer than expected, and the plan has to exist before the payroll you defer from.
The eight steps
Gather what you need
- S-corp’s legal name, address, EIN, and state of incorporation
- Your Social Security number and photo ID
- Your role in the business, such as president
- Beneficiary’s name, birth date, and SSN
- Business bank account details for future contributions
Why this matters
You’ll fill in the same business details on more than one form. Having them ready keeps every form consistent, which avoids rejected paperwork.
Is your business eligible?
Schwab’s Individual 401(k) is built for owner-only businesses, or businesses run by an owner and spouse. If your S-corp has other employees who work enough hours to qualify, you’d need a regular 401(k) or a SEP-IRA instead.
Download Schwab’s Individual 401(k) forms
- Go to schwab.com/forms and find the Individual 401(k) forms section
- Download the Plan Adoption Agreement, Account Application, Elective Deferral Agreement, and Individual 401(k) Summary
- Call Schwab if you’d like a representative to walk you through the forms
Why this matters
At Schwab, a Solo 401(k) is set up with paper forms rather than a fully online application. Knowing what each form does makes them much easier to complete.
The four forms and what each one does
| Form | What it does | Send to Schwab? |
|---|---|---|
| Plan Adoption Agreement | Creates the plan, with your S-corp as the sponsor | Yes |
| Account Application | Opens your account inside the plan. One per account: pre-tax and Roth each need their own | Yes |
| Elective Deferral Agreement | Your written election to defer pay into the plan | No, keep it in your plan records |
| Individual 401(k) Summary | The plan summary every participant must receive | No, keep a copy |
Complete the Plan Adoption Agreement
- List the S-corp as the adopting employer, with its EIN
- Name the plan, for example “Your Business, Inc. Retirement Plan”
- Choose a calendar plan year
- Sign and date it as an officer of the S-corp
Why this matters
This form creates the plan itself. The S-corp is the sponsor, which is why it signs, not you personally.
Fill out an Account Application for each account
- Complete one application for the pre-tax account
- Complete a second application for the Roth account
- Use the same business details as on the Adoption Agreement
- Name your primary and contingent beneficiaries
Why this matters
Schwab requires a separate application for each account type. Opening both now means you can choose Roth, pre-tax, or a split any year without new paperwork.
Open both accounts now
Receives any pre-tax deferrals and the S-corp’s profit-sharing contribution, which at Schwab is always pre-tax.
Receives Roth deferrals from your paycheck. Having it open lets you switch to Roth, or split, in any year.
Sign your Elective Deferral Agreement
- Choose how much to defer, such as all pay remaining after FICA
- Choose pre-tax, Roth, or a split
- Sign and date it before your first payroll with a deferral
- Keep it in your plan records
Why this matters
A deferral only counts if you elected it before the wages were paid. The signed, dated form is your proof.
Submit the forms and keep copies
- Send the Adoption Agreement and both Account Applications to Schwab as its instructions direct
- Save signed copies of every form, plus the Summary
- Watch for your account numbers, often within one to two weeks
Why this matters
Your signed Adoption Agreement shows the plan existed before your deferrals. Keep the full set of copies for as long as the plan exists.
Add the 401(k) to payroll
- In your payroll system, add a 401(k) deduction coded pre-tax, Roth, or both
- Set the amount from your Elective Deferral Agreement
- Run payroll before December 31 so the wages and deferral count for this year
Why this matters
The payroll coding decides what your W-2 shows. A Roth deferral must be coded as Roth (Box 12, code AA), and a pre-tax deferral as pre-tax (code D).
Setting it up in Gusto
Add a 401(k) deduction to your employee profile: pre-tax, Roth, or both. Because the plan is at Schwab, not a provider Gusto integrates with, Gusto withholds the money but doesn’t send it. You move it from the business account to Schwab yourself after each payroll. Check Gusto’s current setup steps for an outside 401(k) before your first run.
Deposit, invest, and confirm
- Send each payroll deferral to Schwab within 7 business days
- Mark each deposit with its type and tax year
- Make the S-corp’s profit-sharing contribution by its tax return due date
- Invest each account in one low-cost fund, such as a target-date index fund or a total-market ETF
Why this matters
Money that lands at Schwab sits in cash until you buy something, just like in an IRA. Labeling each deposit correctly keeps your Roth and pre-tax money separate and in the right year.
Two things to know about Schwab’s plan. The S-corp’s profit-sharing contribution is always pre-tax; only your own deferrals can be Roth. And the plan doesn’t offer loans, so keep your emergency fund outside it. Once plan assets pass $250,000, you’ll also need to file Form 5500-EZ each year.
What to invest in
One target-date index fund for the year you expect to retire. It rebalances and gets more conservative on its own.
One total-market ETF, such as a Vanguard total world or total U.S. stock ETF, which trades commission-free at Schwab. Add a bond fund as you get closer to retirement.
Use ETFs rather than outside mutual funds, which can carry transaction fees at Schwab. Hold the same fund in both the pre-tax and Roth accounts to keep things easy.
Before you finish: quick checklist
- No employees besides you and your spouse
- Adoption Agreement signed by the S-corp
- Pre-tax and Roth applications submitted
- Beneficiaries named on both accounts
- Deferral Agreement signed before payroll
- 401(k) deduction coded correctly in payroll
- Deposits labeled with type and tax year
- Both accounts invested, not sitting in cash
Want help with the paperwork?
We’ll review your Schwab forms, set the right salary and deferral, code your payroll correctly, and plan the employer contribution around your S-corp return.
Or call 516-261-2171
Sources
- Schwab: Forms and applications, Individual 401(k) forms
- IRS: One-participant 401(k) plans
- 2026 plan contribution limits (IRS Notice 2025-67)
This guide is for general educational purposes and is not individual investment, tax, or legal advice. Schwab’s forms, features, and processes change from time to time; follow the instructions on its current forms. The contribution example assumes a $16,000 W-2 salary with a Roth deferral. Limits shown are for 2026.