401K Business Financing

Quick , Debt Free Business Funding with No Tax Penalties




401K Business Financing

Quick , Debt Free Business Funding with No Tax Penalties


401K Business Financing

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Quick , Debt Free Business Funding with No Tax Penalties


Why use 401(k) Business Financing?

No Debt


Starting your business debt-free will lower your overhead and eliminate risking your home equity. Without loan interest to pay, you can make money sooner rather than later.

    Tax-Deferred


    Since you won’t have to take a taxable distribution using this structure, you can save more for retirement.

    Control


    This funding method allows you to control your retirement funds so you can invest in yourself and create the life you want.

    Confidence


    This tried-and-true structure is a fast, legal funding option that’s been in use since the Employee Retirement Income Security Act became a law in 1974.

    No Debt


    Starting your business debt-free will lower your overhead and eliminate risking your home equity. Without loan interest to pay, you can make money sooner rather than later.

      Tax-Deferred


      Since you won’t have to take a taxable distribution using this structure, you can save more for retirement.

      Control


      This funding method allows you to control your retirement funds so you can invest in yourself and create the life you want.

      Confidence


      This tried-and-true structure is a fast, legal funding option that’s been in use since the Employee Retirement Income Security Act became a law in 1974.

      What is the criteria for using my retirement funds?


      Funding Amount

      • Roll over up to 100% of your retirement account balance
      • Minimum $50,000

      Eligibility

      • Rollable, pre-tax retirement assets – 401(k), 403(b), Traditional IRA, TST, SEP or Keogh accounts
      • Owner must be an employee of the business

      Benefits

      • Debt-free funding option
      • No collateral needed
      • No tax penalties
      • No interest

      Timing

      • Funding in 3 weeks on average
      • Business must be formed to fund

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      ROBS / 401K Business Financing FAQ



      What does ROBS mean?

      It stands for Rollover for Business Startup.  It is a way to use your retirement accounts (401(k) or IRA) to invest in your business without having to pay early withdrawal penalties or taxes.  

      Am I able to stay at my job and still utilize my 401(k) to fund my new business venture?

      You can only use a 401(k) from a previous employer.  If your 401(k) is with a current employer, you must leave your employment position before you are able to utilize the funds for your business.

      What is the minimum amount that can be used?

      45K to 50K is normally the minimum amount of funds to rollover to make it worth the fees that are incurred for the service.

      Can I form a sole proprietorship, LLC or S Corporation If I am going to utilize the ROBS program?

      No, only a C Corporation will work due to IRS restrictions.

      Can I use ANY IRA or 401(k) for the ROBS?

      Roth IRAs and Roth 401(k) accounts cannot be used because they are not tax deferred accounts.

      What is actually occurring when a ROBS is set up?

      A C Corporation is formed and a new 401(k) plan is set up for the C Corporation.  Funds are transferred from the personal retirement account to the new 401(K) account of the C Corporation.  The funds are used to purchase stock in the C Corporation.  The stock is sold and proceeds are used for the business expenses (franchise fees, working capital, equipment purchase, build out, etc.)  All of this is done carefully in order to comply with tax laws and IRS and Department of Labor rules and regulations.  

      Can Key Commercial Capital recommend experienced professionals who set up the ROBS?

      Yes, we have established relationships with experts in the industry and can set up a free consultation for you.  It is important that you understand the options and details so you can make an informed decision. Many of our clients utilize a ROBS and SBA loan combination.  We are very familiar with how to assist you in getting this done.

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