March 5th, 2014 Published by: marcocarbajo

1

401k Business Funding:How to Avoid Penaltiesand Save Thousands

Do you plan to use retirement funds to start or buy abusiness? Discover how to avoid paying large penaltieswith this proven 401k business funding strategy.

For more information go to =>

http://businesscreditblogger.com

401K Business Funding: ItCan Cost You or Save YouThousandsFebruary 20, 2014 By Marco Carbajo

Thinking about taking money out of your 401(k) to start abusiness?

Becoming an investor and owner of a business does have manybenefits but you should be very cautious about using your nestegg. More importantly there are significant legal steps youneed to know so you don’t end up making costly mistakes.

Pulling money out of your 401(k) isn’t simply a decision ofwriting yourself a check. Do this wrong and you risk payinga 10% penalty if you are under the age of 59 ½ plus incomestaxes anywhere from 35%+ depending on your current taxbracket.

Let’s put this in perspective.

If you pull out $100k out of your 401(k) it can cost you $31k ofthat money in penalties and income tax. So instead of $100kyou now have only 69k to invest in your new business. Ouch!Not too worry, the good news is rather than losing thousandsof dollars of your hard earned money there is a better way.

It’s called a Business Directed Retirement Account.

This business funding strategy is nothing new; it has beenaround for decades. It allows you to make your 401(k) plan aninvestor in your own business. Have you heard of the federalgovernment’s Employee Retirement Income Security Act? Itallows people to roll over existing 401(k) plans into a plancreated for a new business.

Just like your 401(k) invests in publicly traded stocks; you’rebasically doing the same thing but into a private stock whichis your own business. For thousands of startups, this fundingstrategy works. According to FRANdata, 4,050 businesses –60% of them franchises – were launched with retirementrollover money.

Now keep in mind, using retirement funds to start a businessis not a do-it-yourself transaction. It is extremely complexand requires the help of a financial planner or third-party retirement-plan administrator. The process requirescomplying with a long list of IRS regulations and avoidingmaking certain prohibited transactions.

It requires setting up a C Corporation and a brand new 401(k)customized specifically for this type of strategy with all the IRSrules that go along with it. The penalties for not complying withthe rules are hefty to say the least.

This strategy makes sense if you plan to invest $50k or moreof retirement funds in a business. With a business directedretirement account you can start a business relatively debt-free, increasing the chances of you becoming profitable muchfaster. Through this funding strategy you can be the investorand owner of your business.

With 401(k) business funding you have the unique abilityto base decisions as either an investor or business ownerdepending on what you believe is in your best interest. Whileit may seem risky – starting a business is risky no matter howit’s financed.

Need expert advice setting up a business directedretirement account? Submit your contact information anda BDRA funding specialist will contact you within 24 hours.

March 5th, 2014 Published by: marcocarbajo

2

Plus receive my Business Credit Seminar audio FREE ($597Value) =>http://www.businesscreditblogger.com/2014/02/20/401k-business-funding/

To Your Success In Business and in Life!

Did This Blog Help You? If so, I would greatly appreciate if youlike and shared this on Facebook.

About the author

Marco Carbajo is a business credit expert, author, speaker,and founder of the Business Credit Insiders Circle. He is abusiness credit blogger for Dun and Bradstreet CredibilityCorp, the SBA.gov Community, and All Business.com. Hisarticles and blog; Business Credit Blogger.com, have beenfeatured in ‘Fox Small Business’,'American Express SmallBusiness’, ‘Business Week’, ‘The Washington Post’, ‘The SanFrancisco Tribune’,‘Alltop’, and ‘Entrepreneur Connect’. Youcan also find Marco on Google+.

GET YOUR FREE BUSINESS CREDIT BUILDINGAUDIO Today! If you're serious about buildingbusiness credit and obtaining funding get yourFREE audio and newsletter today at =>http://startbusinesscredit.com