Using Your IRA to Start a Business  

Using Your IRA to Start a Business

Many people cannot start their own businesses for one reason — they lack the capital needed to buy equipment, a building, products and supplies. Inadequate funds can often deter people from creating their dream company, but if you have a retirement account like an IRA or a 401(k), you can secure needed capital. You can open or convert your current accounts to self-directed to get started.

Self-Directed IRA Business Ownership

Buying a business with IRA funds is still an investment, so you should do your due diligence throughout the process. Avoid investing your entire account into a business, and do extensive research to determine if this option will be right for you.

With your existing IRA, you can transfer some of these funds to a custodian that manages self-directed accounts — such as Accuplan — which allows you to put your money toward alternative investments like a private company.

Using a Self-Directed 401(k) to Start a Business

Solo or self-directed 401(k) plans are ideal for ventures like sole proprietorships and small businesses. With this plan, you’ll be considered both the employer and an employee, meaning you can make higher contributions to increase the amount of funds you put toward your chosen investments.

By using a self-directed 401(k) type called an Employee Stock Ownership Plan (mySOP), you can buy shares in your enterprise, which will transfer money from your retirement account into your business. Through direct ownership of your company, you also control your 401(k) plan’s performance.

How the Process Works

How the Process Works

Using retirement funds to buy a business involves separate steps. Here’s a more detailed rundown that can help you get started:

  1. Create a C-corporation: Accuplan will form a C-corp within the appropriate state, making you the salaried manager of this business.
  2. Create a mySOP: We’ll develop a mySOP for you and file it with the Internal Revenue Service (IRS), with you acting as the plan’s trustee.
  3. Roll over your funds: Transfer your money from a self-directed 401(k) or IRA account to your mySOP by requesting a rollover from your current plan.
  4. Set up bank accounts: Your plan and company should have checking accounts so you can deposit the rollover funds into your business.
  5. Make direct investments: Once you’ve established your accounts and requested a rollover, you can begin putting money into your business by purchasing stock in your C-corp with pretax mySOP funds.

Get More Information About Using Your IRA and 401(k) Money From Accuplan

Creating your desired business can be easier than expected when you take advantage of your retirement funds and connect with an expert financial partner. At Accuplan, we have the years of experience needed to help you succeed in your new venture. 

Contact us online today to talk to one of our professionals about opening a self-directed IRA or 401(k) account. We are ready to help you open your business and gain control of your funds. 

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