Charles Schwab 401(k) match, vesting and fees

Participants are immediately vested in their 401(k) contributions, rollovers, Basic Match, and investment earnings on these amounts. Vesting of the discretionary Profit Contribution is dependent upon the participants’ number of years of service: 1 year of Service – 0%; 2 years of Service – 25%; 3 years of Service – 50%; and 4 years of Service or more – 100%.

Employees who do not enroll are automatically enrolled at a pre-tax contribution rate of 6% and may change or stop contributions to the Plan at any time. The Plan features an Annual Savings Adjustment Program that automatically increases current 401(k) contribution elections by 1% each year until the total contribution election reaches 15%.

Employees eligible to participate in the 401(k) salary deferral program are allowed to elect and make Roth 401(k) contributions, which are made on an after-tax basis, and/or after-tax employee contributions, which are contributions made after taxes are deducted from eligible compensation. Combined pre-tax contributions and Roth 401(k) after-tax contributions may not exceed the limit on 401(k) deferrals under the IRC. CSC may match Roth 401(k) contributions in the same manner as the pre-tax 401(k) Basic Match. Any of CSC’s Roth 401(k) match contributions are made on a pre-tax basis and will be taxable to the participant upon distribution from the Plan.

Participants may borrow a minimum of $1,000 up to a maximum of the lower of: 50 percent of their vested 401(k) account value, or $50,000 reduced by their highest outstanding loan balance for the preceding 12 months. Loan terms may not exceed 5 years (or 15 years for the purchase of a primary residence). A loan is secured by the balance in the participant’s account and bears interest at a rate equal to the prime rate at the time the loan application is made, plus one percent. Principal and interest are paid ratably through payroll deductions. Loan payoffs can be made with no prepayment penalties.