TD's 401(k) business for RIAs soft closing April 1

Charles Schwab is winding down TD Ameritrade’s defined-contribution business for RIAs as it plans to absorb the unit in the future.

The TDA Retirement Plan will be closed to new clients starting April 1, with business instead going to Schwab’s Retirement Network for Advisors, a company spokesperson said in a statement. Schwab plans on eventually “combining elements” of both systems “to provide an enhanced offering for advisers.”

The TD product provides record keeping, plan administration and custodial services for 401(k), 403(b) and 457 plans.

Both the Schwab and TD systems are specialty products used primarily by advisers working with small or midsize business owners who want to provide 401(k)s to their workers. Only about 5% of the company’s advisers use either product, the spokesperson said. Schwab declined to say how much business is in either system, as it does not publish those statistics.

News that the plan would close to new clients April 1 was reported Wednesday by Citywire.

Last month, Schwab indicated it would cut 200 employees across its business, the second round of reductions following its acquisition of TD Ameritrade. In October 2020, when it finalized the acquisition, it announced that there would be about a 3% total reduction in the workforce of the combined companies, or about 1,000 fewer positions due to overlapping roles.

Last year, Schwab stated that the two companies would operate as separate broker-dealers until their eventual integration, a process that it estimated would take 18 to 36 months. At the time of the acquisition, the two entities oversaw about $6 trillion in assets under management.