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W hat if you could rescue your business with your IRA or 401(k) funds? Did you know that business buyers have occasionally been able to use their IRA or 401(k) funds to buy a business and not pay taxes or penalties at the time of the transaction? Since this is an accepted business transaction structure, you can potentially mirror it to gain access to the funds you need. There are creative ways to access retirement funds. This action will essentially move all or part of the ownership of your company into the retirement fund as an asset.

There are many, many rules and, of course, some exceptions. If done properly, however, you can basically use your own retirement funds, tax-free, to fund your business. Be sure to engage your legal and accounting advisors in all of these investigations and decisions. Retain a specialist to make sure your plan qualifies, then follow these few key steps.

The mechanism works this way. There is a fee in the $5,000 range required to set this up. Also filing and other fees of approximately $1,500 and a small annual management fee will be incurred to assure future regulatory compliance. However, when compared to losing your company this option should be considered.

It sounds simple, but careful legal, tax, and technical navigation are critical to ensure that you do not violate any IRS rules that would result in a substantial penalty. Done correctly, this technique can unlock your retirement investment funds for use!

You will need a “corporate entity form” to accomplish this. Be certain to discuss this with your legal advisor and have it set up properly. Tax laws change and there may be other options permitted or regulations added.

The “Expert” that assists you will help with the establishment of the needed accounts and structure. Take a little time to investigate this funding source. If it will work in your situation, take the added time to complete the process with professional assistance. If it does not seem promising, move on to other options.