Buying a Business Using Retirement Funds - An Example

Put your money to work! Invest it in your own business and let your money work for you! You can use cash from your 401(k) or IRA account to purchase a business without incurring early distribution penalties, with no taxes, no loan repayment, and no hassle.

For example, a Texas resident using $100,000 from a qualified retirement fund can keep the extra 31% that would have been paid in taxes, leaving an additional $31,000 to fund the new business by adopting a transfer trust plan versus withdrawing the funds outright.

With the adoption of a pension transfer trust, you are allowed to convert 401(k) and IRA funds into privately-held stock in your new business. Pension and tax advisors can provide all the specific components necessary to make sure the transaction is in compliance with all applicable IRS Code Sections, ERISA Law, and Department of Labor Letter Rulings.

The following table uses a simple example to compare the costs associated with early withdrawal of retirement funds for the purpose of injecting the cash into a business acquistion and paying the related taxes and penalties to withdrawing the same funds but adopting a transfer trust plan:



For more complete information on using qualified retirement funds to purchase a business, you may wish to read this article, Retirement Funds Can Finance A Business Acquisition, and visit websites such as these:

Pension Transfer Advisors
Walker Advisory Associates
BeneTrends, Inc.
DRDA, P.C.

The purpose of this article is to alert prospective buyers of alternatives for financing the purchasing of a business and not to provide tax advice. Contact proper legal or tax professionals for more information on this subject.