Solo 401(k) Brokerage Account: Fidelity vs. Schwab for 2026
Key Takeaways
- Form 5500-EZ must be filed once a Solo 401(k)’s market value exceeds $250,000 as of the end of the plan year, combined with the value of any linked defined benefit plan.
- Fidelity supports direct ACH linking from a personal or business bank account for Solo 401(k) contributions; Charles Schwab requires mailed checks, a branch visit, or a linked personal/business Schwab account.
- The 2026 Mega Backdoor Roth limit is $72,000 per spouse with sufficient W-2 wages, meaning a married couple co-owning an S-corp could convert up to $144,000 combined for the year.
- Wire transfer fees run approximately $20 at Fidelity versus approximately $25 at Schwab for loan or alternative-investment disbursements, per My Solo 401k Financial’s account of current pricing.
- E*TRADE has taken as long as nine months to open Solo 401(k) brokerage accounts in My Solo 401k Financial’s client experience, and the firm recommends avoiding it.
- T. Rowe Price does not open third-party brokerage accounts for a self-directed Solo 401(k) offered by any provider, including My Solo 401k Financial.
- A Solo 401(k) plan must be signed by December 31 of the tax year to preserve the right to make all contribution types — employee, employer, and voluntary after-tax — up until the following year’s business tax return deadline, including extensions.
Watch the full live webinar and Q&A: “Which Brokerage Account is Best for Solo 401k?”
Why Doesn’t My Solo 401k Financial Steer Clients to One Brokerage?
A Solo 401(k) brokerage account can be opened at whichever bank, credit union, or brokerage firm the plan participant chooses, because My Solo 401k Financial does not accept referral payments or kickbacks from any financial institution. The firm serves as the Solo 401(k) plan document provider and handles compliance reporting, while the participant separately selects where to hold the funds.
“We don’t receive any type of kickbacks from any bank or brokerage firm because that’s not our practice. And that’s actually questionable if you were to receive some type of referral or kickback.”
(~0:45 in the webinar [VERIFY: timestamp])
What’s the Difference Between a Basic Solo 401(k) and a Self-Directed Solo 401(k)?
A Basic Solo 401(k) is the in-house plan Fidelity or Schwab offers directly. It does not permit a Mega Backdoor Roth, does not come with the $1,500 auto-contribution tax credit, and does not allow participant loans. A Self-Directed Solo 401(k) from a third-party provider such as My Solo 401k Financial adds all of those features, while Fidelity or Schwab still hold the funds through what they call a non-prototype investment-only brokerage account.
“Brokerage firms like Fidelity and Schwab, they offer a Solo 401(k), but we like to call it a basic Solo 401(k) because it doesn’t come with all the bells and whistles. For example, you can’t perform a Mega Backdoor Roth.”
(~4:38 in the webinar [VERIFY: timestamp])
Fidelity vs. Charles Schwab for a Solo 401(k) Brokerage Account
Fidelity and Charles Schwab are the two brokerages My Solo 401k Financial clients use most often for a Solo 401(k) brokerage account. The main practical difference is how contributions get funded. Fidelity allows a personal or business bank account to be linked directly for electronic ACH contributions, set up from the bank’s side using Fidelity’s routing number and the Solo 401(k) brokerage account number. Schwab requires mailed checks or an in-branch deposit unless the participant also opens and links a separate personal or business Schwab account.
“With Fidelity you can actually link your bank, your personal or business bank account, to those Fidelity brokerage accounts… so that you can make contributions electronically via ACH.”
(~14:33 in the webinar [VERIFY: timestamp])
Both brokerages offer open-architecture investing in stocks, ETFs, mutual funds, and bonds, and both permit alternative investments — real estate, private equity, and similar assets — through the same brokerage account under a self-directed plan. Both also allow participant loans, with loan documents prepared by My Solo 401k Financial and proceeds wired directly to the participant’s personal bank account.
Does the Mega Backdoor Roth Work at Both Fidelity and Schwab?
The Mega Backdoor Roth works through either brokerage because the strategy is enabled by the Solo 401(k) plan document from My Solo 401k Financial, not by the brokerage itself. A one-participant plan uses three separate holding accounts under the same plan — pre-tax, Roth, and voluntary after-tax — each tracked separately so the pro-rata rule that applies to a backdoor Roth IRA does not apply here.
“The overall limit for the Mega Backdoor Roth for 2026 is $72,000… and it’s not impacted by any contribution you make to your daytime employer 401(k).”
(~22:28 in the webinar [VERIFY: timestamp])
“You could contribute $72,000 times two, which is $144,000 in conversions for 2026 between both spouses.”
(~23:28 in the webinar [VERIFY: timestamp])
What About E*TRADE, Interactive Brokers, and TradeStation?
E*TRADE is not recommended by My Solo 401k Financial. Since its merger with Morgan Stanley, account opening for a self-directed Solo 401(k) has reportedly taken as long as nine months, with repeated requests to resubmit forms and additional delays funding the account afterward.
“Ever since they merged with, I think, Morgan Stanley, they are terrible to work with with respect to opening up brokerage accounts for a self-directed Solo 401(k). I’ve seen them take as long as nine months before they open the brokerage accounts.”
(~31:04 in the webinar [VERIFY: timestamp])
Interactive Brokers has an online application and no reported negative feedback from clients, but it is not well suited to the Mega Backdoor Roth strategy — Fidelity or Schwab are recommended instead for that purpose. TradeStation is used mainly by clients focused on futures and options trading, not Mega Backdoor Roth conversions.
Which Brokerage Firms Will Not Open a Third-Party Solo 401(k) Account?
An attendee asked this directly during the live Q&A portion of the webinar.
“Which full brokerage firms will not open accounts for a third party plan like My Solo 401k Financial?”
(~32:03 in the webinar [VERIFY: timestamp])
“T. Rowe Price does not provide third party brokerage accounts for a self-directed Solo 401(k) offered by any provider, including My Solo 401k Financial.”
(~32:23 in the webinar [VERIFY: timestamp])
Solo 401(k) Brokerage Comparison
Summary: Fidelity and Schwab are the two full-featured options for a self-directed Solo 401(k); E*TRADE works but is slow, and T. Rowe Price does not offer this service at all.
What Compliance Filings Come With a Solo 401(k) Brokerage Account?
My Solo 401k Financial handles two recurring IRS filings for clients: Form 5500-EZ, an informational return required once a Solo 401(k)’s market value exceeds $250,000 as of the plan year-end (combined with any linked defined benefit/cash balance plan value for that threshold test, though each plan still files its own return), and Form 1099-R, which reports Mega Backdoor Roth conversions, pre-tax in-plan conversions, required minimum distributions, normal distributions, hardship distributions, and transfers out to an IRA. A final Form 5500-EZ is required when a Solo 401(k) plan is closed, regardless of the plan’s value at that time.
How Do You Open a Solo 401(k) Brokerage Account at Fidelity or Schwab?
For Schwab, My Solo 401k Financial prepares paper “company retirement account” applications for the client’s signature and faxes them to Schwab directly. For Fidelity, clients with an existing Fidelity relationship (such as a prior IRA or former employer plan) can typically upload the new brokerage forms online; clients without an existing profile generally need to mail the forms to Fidelity’s back office rather than bring them to a local branch, which My Solo 401k Financial does not recommend due to added delays.
Frequently Asked Questions
Which Brokerage Account Is Best for a Solo 401(k)?
Fidelity and Charles Schwab are the two most commonly used brokerages for a self-directed Solo 401(k) offered by a third-party provider like My Solo 401k Financial. Fidelity is generally easier for electronic contribution funding via ACH, while Schwab requires mailed checks unless a linked personal Schwab account exists. Both support the Mega Backdoor Roth and participant loans.
Can I Use Fidelity or Schwab for a Solo 401(k) Offered by a Third-Party Provider?
Yes. Fidelity and Schwab both provide non-prototype investment-only brokerage accounts to hold funds for a Solo 401(k) sponsored by an outside plan provider such as My Solo 401k Financial. The brokerage simply holds and reports on the account; the plan provider handles compliance filings like Form 5500-EZ and Form 1099-R.
What’s the Difference Between a Basic Solo 401(k) and a Self-Directed Solo 401(k)?
A Basic Solo 401(k), offered directly by Fidelity or Schwab, does not support a Mega Backdoor Roth, participant loans, or alternative investments. A Self-Directed Solo 401(k) from a third-party provider like My Solo 401k Financial adds all three, while still allowing funds to be held at Fidelity or Schwab.
Does the Mega Backdoor Roth Work at Both Fidelity and Schwab?
Yes. The Mega Backdoor Roth is enabled by the Solo 401(k) plan document, not the brokerage. Both Fidelity and Schwab support the separate pre-tax, Roth, and voluntary after-tax holding accounts the strategy requires under one plan.
How Much Can a Married Couple Contribute to a Mega Backdoor Roth in 2026?
The 2026 Mega Backdoor Roth limit is $72,000 per person, provided the individual reports at least $72,000 of Box 1 W-2 wages from a self-employed S-corp. A married couple who each meet that wage threshold and co-own the business could combine for up to $144,000 in conversions for the year.
Is E*TRADE a Good Choice for a Solo 401(k) Brokerage Account?
My Solo 401k Financial recommends avoiding E*TRADE. Since its merger with Morgan Stanley, account opening for a self-directed Solo 401(k) has reportedly taken as long as nine months, with repeated form resubmissions and further delays before the account is fully funded.
Can I Use Interactive Brokers or TradeStation for a Solo 401(k)?
Interactive Brokers can be used and has an online application, but it is not well suited to the Mega Backdoor Roth — Fidelity or Schwab are recommended instead. TradeStation is used mainly by clients trading futures and options rather than executing a Mega Backdoor Roth strategy.
When Does a Solo 401(k) Have to File Form 5500-EZ?
Form 5500-EZ is required once a Solo 401(k)’s market value exceeds $250,000 as of the plan year-end, combined with any linked defined benefit plan value for that threshold. A final Form 5500-EZ is also required when the plan is closed, regardless of its value at that time.
Glossary
- Self-Directed Solo 401(k)
- A Solo 401(k) administered by a third-party provider that supports the Mega Backdoor Roth, participant loans, and alternative investments, while funds are held at a brokerage of the participant’s choosing.
- Basic Solo 401(k)
- The in-house Solo 401(k) offered directly by a brokerage such as Fidelity or Schwab, without Mega Backdoor Roth, participant loan, or self-directed alternative investment features.
- Mega Backdoor Roth
- A strategy that converts voluntary after-tax Solo 401(k) contributions into a Roth Solo 401(k) holding account, subject to an annual overall limit ($72,000 for an individual in 2026).
- Form 5500-EZ
- An informational IRS return required for a Solo 401(k) once its market value exceeds $250,000 as of plan year-end, and always required in the plan’s final year.
- Form 1099-R
- The IRS form used to report Solo 401(k) distributions and conversions, including Mega Backdoor Roth conversions, RMDs, and transfers to an IRA.
- Non-Prototype Investment-Only Brokerage Account
- The type of account Fidelity or Schwab opens to hold funds for a Solo 401(k) sponsored by an outside plan provider; the brokerage holds the assets but performs no plan compliance work.
This article is based on a live webinar hosted by My Solo 401k Financial. Analysis by Mark Nolan, Founder/Compliance Officer, My Solo 401k Financial.
Learn more about the Mega Backdoor Roth using a Solo 401(k) plan or explore Solo 401(k) plan options with My Solo 401k Financial.
