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Self Directed Brokerage Account

<span>What is a SDBA?</span>

What is a SDBA?

For many years, the investment options offered in company-sponsored retirement plans were limited to a pre-selected list of mutual funds and annuity contracts. However, thousands of employers have enhanced their retirement plans to include a brokerage window opportunity so that plan participants have more choice and greater flexibility with their retirement investments. This option, known as the Self-Directed Brokerage Account (SDBA), exists in 401(k), 403(b), or 457 plans where participants have access to stocks, bonds, mutual funds and ETFs.

How it Works

A self-directed brokerage account is an option that opens up access to a network of mutual funds. Some SDBAs may allow investments in stocks, bonds, and exchange-traded funds, as well. When retirement savings are placed in an account like this, investments are allocated to investments apart from those available in the core plan.

Greater Flexibility

The self-directed brokerage account gives investors access to a wider range of investment choices than the default ones presented in the plan. If you are unimpressed or dissatisfied with the investment choices available in your retirement plan, check to see if a self-directed 401(k) is available. It could be a viable alternative rather than settling for the core investment lineup.

The accounts may come in the form of a "mutual fund window" providing access to thousands of funds to choose from. Some plans give investors access to a more flexible “brokerage window” account that may allow you to invest in mutual funds, exchange-traded funds, and even individual stocks and bonds. The main concept is to give more choices to a more hands-on investor.

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