We are living in interesting times… The Government continuously places emphasis on unemployment and job creation while our largest banks boast of the investment capital they have made available to business. With all of this emphasis place on job creation you would expect to see our office buildings filling up and the unemployment rates dropping yet it simply is not happening. If you are one of those people that still sees America as the land of opportunity you may have another source of funding for that new business venture… Your 401k!
The process is often referred to as a “Rollover Business Startup” and it actually involves the use of your retirement plan for the acquisition and operation of a new business. You may ask: Don’t I have taxes and penalties if I pull funds out of my retirement? Well, the answer is yes and that is precisely why we do not pull anything out of the plan.
The Rollover Business Startup is this month’s opportunity. So how does it work? The following is a list of the steps required to establish your new business:
1. Create a new 401k plan for the company.
2. Rollover your current retirement plan into your new 401k
3. Your new 401k plan invests in the businesses new C-Corporation. The shares of the new C-Corporation are now owned by your new company retirement plan.
You are now ready to run that new business!
Although buying a business with your retirement account is not a difficult process, understanding the legal issues, planning and preparation are essential. It is critical an investor’s tax and legal counsel review the process and the potential pitfalls before moving forward with any business acquisition, the Rollover Business Startup is to be reviewed and approved before being acted upon.
The process to establish a Rollover Business Startup typically takes two to four weeks.