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Can you use your 401(k) to start a business?

Posted on October 2, 2011 by David Conley in For Business
0

The answer is a very qualified yes. However, it’s not as simple as writing a check from your IRA.

This Wall Street Journal article  gives some basic guidelines.  As the article clearly states, don’t do this on your own.

Call us for professional help.
Article excerpt

“There are ways to use IRA and 401(k) funds to finance your start-up business. But it isn’t simply a choice of writing yourself a check. There are significant legal steps. The key is rolling over the money into a corporate retirement account that permits you to invest in the business.

A nonexpert would likely need the help of a financial planner or third-party retirement-plan administrator. These professionals set up a C corporation and establish a corporate retirement account. A person can then roll outside retirement accounts into the corporate plan and invest the money in the company’s stock. Since the person is buying shares of his or her own business, he or she is effectively feeding it money.”

<<<Read the full article>>>

 

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David Conley
David is a partner at Smith, Conley & Associates, PC. In addition to writing and tax consulting, he is active in the pro-life community serving as President of the Fayette County Right to Life chapter of Georgia Right to Life.
He is also a founding Board Member and Finance Director of the Fayette Pregnancy Resource Center and serves on the Board of the National Equal Rights Institute.
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