Did you know that you can use your 401K to fund a new franchise, start-up company or an existing business without tax penalties or early distribution penalties? Knowing this strategy may help you fulfill your dreams of business ownership.
Here is a brief overview of how the rollover works:
A “C-Corporation” is opened and filed with your Secretary of State.
The C-Corporation sponsors the new 401K plan, (you are the trustee and have check book control).
You roll the funds into the new 401K plan, which invests (purchases) shares directly from your C-Corporation. This is called a QES (Qualified Employer Stock) transaction or purchase.
The newly formed C-Corporation has cash and your retirement plan has stock in the company.
For example: It is like buying shares of Target stock in your IRA/401K. You exchange your retirement cash for shares of stock in Target. Replace Target with your corporation.
Using this strategy creates many benefits listed below:
You invest your retirement funds in your business without taxes or penalties.
There are no funding hassles or time delays to move forward with your business purchase. It typically takes about 3-4 weeks to complete the rollover.
Your pretax dollars fund your business without incurring any debt.
You gain business equity and improve your cash flow from the inception of your business.
Credit score is not used as criteria for the rollover.
You can use the funds to receive a salary during start-up.
You can accelerate your business profitability by eliminating or reducing interest from the SBA, bank or home equity loans.
You can set aside tax deductible retirement savings up to $200K per year. \
You can optimize your business equity and value quickly.
You can use additional funding strategies and combine them with the rollover.
Why delay your dream of franchise business ownership? Call us today, 866-288-9404, and a FranFinders, expert franchise consultant will talk to you about this widely-used strategy.
