There are plenty of options for financing your next business or franchise concept. Many of these options include borrowing other people’s money, borrowing money against your credit cards, using significant collateral to obtain a loan, and strict repayment guidelines, for example. Wouldn’t it be great to use your own hard-earned money instead?
Enter 401(k)/IRA funding, also known as a Rollover as a Business Startups (ROBS). ROBS is an IRS-approved program that allows you to roll your personal retirement savings into your company’s 401(k) plan to fund your business. You can use these funds for business expenses, penalty-free and tax-deferred, and the money does not have to be repaid because you are NOT taking out a loan – you are simply rolling your investments from one entity (or entities) to your new plan.
Let’s explore some of the factors that go into determining whether a 401(k) Rollover/ROBS is right for you.
You want to invest in yourself
A 401(k) Rollover allows you to move your investments from a qualifying Keoghs, TSP, non-Roth IRA, 403b, 457 and other plan types to your newly-formed 401(k) plan. This process has been in place and approved by the IRS since the 1970s, so it’s not a new funding option, although many people have just become familiar with it in the last 5-10 years.
You have enough money saved
Tenet Financial Group recommends that individuals plan to move a minimum of $50,000 with the Rollover due to set-up costs and on-going maintenance fees to administer the new 401(k) plan. For prospective business or franchise owners who need less than $50,000, a ROBS might not be the best funding option (Note: Tenet Financial Group can help you understand your options).
You’re prepared to support your employees
When you roll your savings into a new retirement plan for your company, you have two options: create a full 401(k) plan or a profit-sharing plan. With a 401(k) plan you can help employees save for their own retirement and decide whether to match employee contributions. With a profit-sharing plan, you divide profits among employees at regular intervals to reward a successful business season. Either option is a good way to thank employees for their hard work.
You’re ready to get started
Establishing your 401(k) plan can happen quickly, gaining access to your money in as little as three to four weeks. If you’re looking to start your business before 2019 ends, there’s still time for you to set up your 401(k) plan to fund your exciting new venture.
Now through December 31, 2019, Tenet Financial Group is waiving initial set-up fees for all new ROBS/401(k) Plans until January 2, 2020. For more information about this Special Year-End Promotion, contact Tenet Financial Group today via email or call (888) 901-3335, Option 9, to reach our Senior Consultants.