Buying a business can seem like a daunting task, but it is becoming an increasingly popular path these days. While there may be a lot of people that are eager to start a business, there are some that just don't know what steps to take in order to buy a business or don't have the necessary funds. There is a way in which you can start a business by using your Individual Retirement Account (IRA) or by using your 401K account.
Read on to learn what you need to do in order to make it a reality. Here is how you can buy a business using your IRA or 401K.
One of the first things you should think about when you want to start a business with your IRA or 401K is the risk involved. Once you have considered the risks that could occur when you are using your IRA or 401K to start a business, it's time to start the process that it takes to get things done.
distribute Your Assets
The first thing you want to do is distribute assets from your account. You can call your plan administrator and request a distribution packet from them or you can see if there is an online form of the packet.
Then you'll decide if you want to do a partial withdraw or a complete withdraw… a good point to remember is exactly how much money you will need access to when you buy your business. You'll also want to keep in mind any fees that may come with using these funds.
Follow Your Plan
Once you have followed these steps the next thing to do is buy the business. When you are buying a business with your IRA or 401K account funds, you want to make sure to roll over the money into a corporate retirement account. This will permit you to invest in the business.
It may also be a wise decision for you to get the help of a financial planner or even a third-party retirement plan administrator… you will want them to set up a C corporation for you and also establish a corporate retirement account for you as well. Once that is done you will be able to roll outside retirement accounts into the corporate plan you have and then you will be able to invest the money into the company's stock.
These small steps will allow you to be able to use either your IRA or 401K account funds to be able to buy the business you desire.