From Self-Directed Accounts: 401(k)s with a View by Ellen Hoffman, March, 2000

Assuming you already have a 401(k), what are the administrative and operational implications of adding an SDA option?

First, make sure that an SDA would be consistent with your plan’s investment policy, suggests Jon C. Chambers, vice president of Schultz Collins Lawson Chambers, Inc., investment consultants in San Francisco. If you adopt such a plan, you may have to amend the policy. (See “401(k)s Need Investment Policies, Too,” October 1999 HR Magazine, p. 100.)

Chambers says vendors offer three different models for SDAs:

• A “full service model,” such as those offered by Schwab or Fidelity, in which the SDA is one of several investment options open to plan participants;

• Outsourcing, in which the plan hires an outside administrator, which may be a bank or a brokerage company, to manage the accounts; or

• A multi-brokerage company option, in which each participant may choose and use his or her own broker.