David Moore with IRA Advantage examines using an IRA or 401K for a rollover business start-up. He looks at creative solutions that deliver great opportunities for investors. Learn about the range of your investment options to put your retirement accounts to work for you.

Watch or Read

What Is a Rollover Business Start-up?

When we started our venture into self-directed retirement accounts, it was aimed primarily at giving our 1031 clients additional opportunities to go into real estate, since we had so many ask us about the process. What we didn’t fully anticipate is the collapse and the recession; then suddenly we had people with all kinds of other needs that we found solutions for.

One of those solutions was the rollover business start-up. Can you imagine a situation where somebody had been working for a company, got hit by that recession, lost their job, and they can’t get a job? Now they’re in a situation where maybe for the first time in their life, they’re having to figure out a way to get going again.

The rollover business start-up is a solution for someone in that situation. In a nutshell, what we do is take the previous retirement account, whether it’s an IRA or 401K, and roll that into a new 401K plan. That 401K plan is then going to buy into a C-corporation. We actually require our clients to be shareholders as well. Now you’ve got a C-corp that’s owned by your retirement account and you. That C-corp buys the business you intend to work in. We’ve used that process for everything from mattress companies, car dealerships, fishing operations, mining operations, and more. You name it, you can do it. It’s just a situation where we’re creating a new entity that you’re working for.

My favorite example of a creative solution for someone is an older couple that came to us a few years back. They expressed their desire to take their retirement accounts, each of them had IRAs, and buy a mobile home/RV park. We said, “Well, okay, we’ll create a checkbook IRA for you in that situation. It should take care of your needs, and it will get you where you need to be.” Then they went further to explain that they really wanted to manage the asset. In fact, they want to be the on-site managers living there. That’s definitely something you cannot do with a self-directed IRA—it’s a prohibited transaction. We shifted gears and went into the rollover business start-up. We created the new plan and the C-corp, which bought the mobile home park. Now they are employed as the live-in managers of that mobile home park. They got an investment, a job, and a place to live—all with the rollover business start-up process. I think that’s pretty tremendous opportunity, and it worked great for them.

Self-Directed IRAs: What Is a Rollover Business Start-up?

Many can call themselves IRA experts. Be sure you’re dealing with true professionals when it comes to your retirement planning. Give the IRA experts at IRA Advantage a call today at 503-619-0223.