Under the heading of great 401k investments, did you know it’s possible to finance the purchase of new business with your retirement account? The process is called a “rollover business startup” and your 401k literally owns the new business.
Three Easy Steps to buying a business with a 401K
- Create your new company 401k plan.
- Rollover your current Retirement Plan into your new company 401k.
- Your new 401k invests in the business’ new C-Corporation. The shares of the new C-Corporation are now owned by your new company retirement plan.
You are now ready to acquire the new business!
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If the business costs more than you have available in your retirement account it is possible to invest with your retirement account. Yes, it is possible to jointly own the business though timing is critical. Any joint ownership between disqualified parties must be made simultaneously.
Get Ready Today
As the old saying goes; be prepared. When negotiating the purchase of a new business for a retirement account all negotiation should be done in the account’s name or if the 401k’s C-Corporation has been completed in the C-Corporation’s name.
Although buying a business with your retirement account is not a difficult process though understanding the legal issues, planning and preparation are essential. The Retirement account must be able to make the acquisition and cover any costs the investment may require. The process to establish a Rollover Business Startup typically takes two to four weeks.