Hidden opportunity in workplace retirement plans

Self-directed brokerage accounts, known as SDBAs or brokerage windows, are optional features in many 401(k), 403(b) and 457 plans. They let participants invest in securities beyond a plan’s core menu, such as mutual funds and ETFs, while keeping assets inside the employer plan and preserving tax-advantaged status.

Research compiled by the ERISA Advisory Council found brokerage windows are offered in roughly one-quarter of defined-contribution plans and in nearly half of plans with more than 5,000 participants. Testimony collected by the council estimated that 2–4% of plan assets are invested through SDBAs, with usage concentrated among participants with higher balances and greater engagement.

Charles Schwab’s Self-Directed Brokerage Account Indicators Report for the quarter ending Dec. 31, 2025, showed average SDBA balances exceeded $380,000. Advised SDBA accounts averaged more than $580,000, while non-advised accounts averaged about $334,000. Accounts that received professional advice held nearly twice as many positions and had more diversified allocations.

Moving money into an SDBA keeps funds inside the employer plan, so participants do not need a distribution, rollover or job change to access broader investment options. Financial advisors can use brokerage windows to manage in-plan assets and coordinate those holdings with clients’ outside accounts.

Plan sponsors set the rules for brokerage windows and decide whether to permit them and which investments they will allow. Participants using SDBAs must consider transaction costs, account minimums and any restrictions imposed by the plan’s brokerage provider.

Some providers and advisory firms offer services that operate inside brokerage windows, including managed strategies and compensation arrangements that do not require direct fee deductions from plan accounts.

Despite availability in many large plans and high average balances among users, SDBAs accounted for only 2–4% of defined-contribution plan assets in the reported data.