Do you know that you can use your accumulated 401 k funds penalty-free and tax deferred as a down payment to buy a business?
Here is how it works:
Once you have decided on the business you want to purchase, you can use retirement funds to make the down payment. Here is a simplified overview of how it works:
- Set up a new 401K retirement plan by rolling over the funds from your old 401k to the new 401K plan.
- At the same time you set up a C-corporation whose stock will be bought by your new 401K plan (the new 401K actually owns the C-corporation).
- With the cash received from the new 401K plan (from the issuance of stock)—the corporation makes a down payment on the purchase of the business, etc.
If you decide to go this route you need experienced, expert guidance from the start. If this seems like a lot of work, it is worth it! It is one of the few ways to use your own money to invest in yourself penalty free! Our office works with several companies who handle this type of transaction. Give us a call and we will be happy to help.
