BACKGROUND: My wife
and I have a couple of i401K and IRAs and I was wondering how I can find out if
they qualify for conversion into your program.
We each have our own separate
businesses that we might want to fund.
I am also wondering if your program,
in addition to making the funds available for my small business, if they remain
protected via ERISA designated status.
Thank you for your help,
Jason in Dallas TX
ANSWER: You can use your 401k and IRA
funds to fund your existing or new business. The IRS refers to the use of
retirement funds to finance one's business as ROBS.
Only pretax funds and not Roth funds may be used to finance one’s business. Also, if you are looking to finance your existing business with retirement funds (e.g., 401k and traditional IRA funds), the existing business will need to be appraised to ensure the 401k pays/receives fair consideration.
Only pretax funds and not Roth funds may be used to finance one’s business. Also, if you are looking to finance your existing business with retirement funds (e.g., 401k and traditional IRA funds), the existing business will need to be appraised to ensure the 401k pays/receives fair consideration.
Lastly, only 401k plans that have
common-law employees besides the business owner(s) and his or her spouse are
afforded title I ERISA protection.
Thank you for your help,
Jason in Dallas TX
ADDITIONAL INFORMATION
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