Greetings,
I am looking to invest my 401k money into my own business. Has anyone done this before? I see companies out there that do it for thousands of dollars, and I would like to find a way to do it for less. I have looked all over the internet and found terms such as ERSOP or entrepreneur rollover stock ownership plan, and new Corporation 401k Trust Plan. They all say you can use your retirement money to fund your retirement plan in your own business by buying stock in your own company, but not very clear on the process of doing this. I know how to start, and run a business. These companies that charge big fees mention mostly business startup activities, and only a few have anything to do with actually rolling over your money into your own business. I figure if I can just zero in the rollover process I can minimize my cost.
Best Regards,
Eric
Hiya Eric, welcome to the forums. I'm no expert on this, but there are a few options for your 401. You can take a loan from it which has to be paid back, or there is the BORSA Plan: "...which is essentially borrowing money from yourself through your retirement plan.......you're not technically borrowing money from yourself. The money from your 401k is transferred into another 401k for your new business. Then, you establish a C-corporation, and the stock that comprises your C-Corp for your company is traded or purchased by your new 401k. The ERISA tax act allows you to buy stock from your own company and hold it your 401k, which grows in value as your business does" Fund Your Small Business with a BORSA Plan I guess it depends on if this is for an established biz, or a new start up. If your established, I'd personally go and sit down with your accountant and go through the pros and cons, they should be up to speed on this, and will have all your financials to give you good advice. If its a start up, take a long think, do you want to risk this on a high risk venture, which any start up is. Plus I've heard the IRS aren't big fans of this, so I'd definitely get some professional guidance. I've found a couple of threads and links which maybe of use if you haven't seen them already. Using 401k Money To Fund Business Startup. | Intuit Community Use your 401(k) to start a business - MSN Money |
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