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There are two considerations here. First, it is a "prohibited transaction" for a "party in interest" to extend credit to a plan (with some limited exceptions). Parties in interest include the employer, employees, certain relatives of them, fiduciaries to the plan (including the Trustee), service providers (the recordkeeper, custodian, etc.) and others. So, Schwab is avoiding the prohibited transaction as Schwab as broker and service provider to the plan (and maybe Trustee) cannot extend credit (margin) to the plan to effectuate those kinds of trades.

Second, the plan fiduciaries are held to a standard of "prudence" with respect to managing the plan and its assets (even if the plan assets are invested at participant direction). Technically, *all* of the assets of a plan (not just the balance of one participant) *must* be available to pay the liabilities of the plan. So, if something goes awry with one participant's account investments that create a liability, everyone else could (theoretically) suffer a loss. Hence, certain restrictions on what a participant (or Trustee - even if directed by the participant) may do.
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