Transworld Blog

From business brokerage to mergers and acquisitions; we are the business sale specialists.

All Posts

How to Use Your IRA/401k When You Buy a Business

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.

Determine Risk 

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

How to use your IRA/401k when you buy a businessThe 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

Related Posts

The SBA Will Pay Your New Business Loan For Six Months

Why You Should Buy That Business Now There are renewed benefits to using an SBA 7A Business loan to purchase a business.  But you  may have to act quickly to take advantage of it, because they money is expected to run out before the September deadline.  The Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act (The Economic Aid Act) was signed in to law on December 27th, 2020.  Included in this legislation:

What Is Your Business Attractiveness Score?

What Makes A Business Attractive To A Buyer? Buyers purchase businesses for a return on their investment.  Seller's base the business value on past performance, while buyers place the value on the future potential profits and risk level to achieve them.  When the seller puts themselves in the buyer's shoes, it will be easier for them to understand what buyers are looking for and why, and be better prepared for a successful transaction.  Read on to find out what buyers are looking for and what steps you can take as a business owner now, to prepare yourself and your business for a sale in the future.  

Small Business Valuations: How To Increase The Value Of Your Business

To sell your small business, there are some very crucial steps to take before the listing. For one, it is very important to understand your business’s value in the marketplace.  Obtaining a valuation allows you to thoroughly understand a business’s financials and their value in the marketplace, and give you an understanding of the price at which you should list your business for sale. Before that decision is made, a BOV can give you an inside look at what is working and what might not be.

Your Goals Are Just the Beginning

Talk to one of our Advisors today about next steps.

Free Consultation

E-mail address

minnesota@tworld.com

Contact us

+(888) 290-5232

Confidential Consultation

Talk to an Advisor