401K Business Funding Option With Self Investment

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Most business owners don't realize they can invest their 401K in their company.

According to the state and federal tax code, your 401K or IRA retirement investment account can be used to purchase ownership shares in your business. The design of the tutorial is to provide you with the details and benefits of investing as opposed to taking on debt to finance your entity.

Investing your 401K or IRA funds in your business requires there be an entity, such as a corporation or LLC, set up to purchase shares. That entity then sets up a qualifying 401K plan to accept your investment. After which, the funds from your existing 401K or IRA are "rolled over" into the new 401K which then purchases shares in your business.

This funding method is not as complicated as it sounds. It can be a great way to fund your business without incurring any additional debt. However, there are specific rules and laws that you must comply with when using 401k business financing. You will have to follow these investment rules and laws so that this funding option does not cause you any tax problems. This type of business funding requires some legal assistance to complete.

The nice things about this type of self funding are, you can:

  • Use it to buy an existing business or franchise.
  • Start a business without borrowing and going into debt.
  • Save money on interest since this option is not a loan.
  • Invest up to 100% of your existing 401K or IRA.

By taking the business finance pre-qualification test you will know if you qualify for this program and be able to speak with a funding specialist who will guide you through this process.