Using Your 401(k)’s SDBA (Great Benefit for Michigan Teachers)

09/03/2026

As a quick refresher, a 401(k) is a retirement account that is set up through your employer and sometimes offers a contribution match. For example, if you contribute 3% of your paycheck, your employer might match by contributing 3% of the company's money to your account.

One of the only downsides of a 401(k) is that the employer offers a limited number of investment options. If there aren’t any great options, your account’s growth potential is limited.

But there is good news! Many 401(k) plans offer a self-directed brokerage account (SDBA), an investment option that is not as well known. An SDBA allows you to transfer money from your 401(k)’s core account to a different sleeve, still within your 401(k). This new sleeve offers many more investment options, so you are no longer stuck only being able to choose the investments offered in your core account. Many times, the SDBA allows your financial advisor to manage this account with your permission. These benefits can lead to more growth within your account over time and can allow your advisor to more efficiently manage and track your progress.

Example:

State of Michigan employees, including public school teachers, have a 401(k) that would benefit from an SDBA. The State of Michigan uses Voya Financial to hold retirement funds for its employees, but this plan offers a limited number of investment options. Voya uses Charles Schwab to offer an SDBA, called the Personal Choice Retirement Account.

This allows any State of Michigan employee to:

-          Move their investments into this sleeve and choose from better investment options (thousands of funds available on Charles Schwab’s platform)

-          Allow their financial advisor to manage the account

Other benefits of an SDBA include:

-          No tax implications

-          A low cost for the benefit it offers (varies by plan)

-          Costs are still deducted directly from your account, so you aren’t invoiced.

Overall, this is a great way to increase the growth within your 401(k)!

*Do not use only this information to decide if an SDBA is right for you. Please reach out to me with any questions so that we can discuss your specific situation. I never charge for meetings or advice; I only get paid directly from accounts that I manage.

*This is not meant to be an exhaustive list. This is simply a baseline to follow. Please talk with me about your specific situation. I never charge for meetings or advice; I only get paid directly from accounts that I manage.