If you want to start a business but don’t think you have the capital, try unlocking your retirement savings. Using your 401(k) plan for a ROBS in 2022 has multiple benefits, like eliminating penalty withdrawal fees and not paying interest on a new small business loan. Learn more about the process and why it could be the right solution for you.

Tax-Free Startup Capital

When you use your existing 401(k) plan for a ROBS (Rollover for Business Startups), you bypass the penalties and withdrawal fees you’d encounter if you cashed out your plan. You get to hold on to more of your money to invest in your business.

Turn a Profit More Quickly

With small business loans and credit cards, you need to factor loan repayments and interest into your business’s monthly budget. But if you have the qualified retirement funds, your business can make more profit more quickly. Plus, if you’re not in debt, your business earns a healthy credit score, which can be useful for you if you need to take out a loan in the future.

Attract Quality Employees

A key element of 401(k) business financing is the “rollover” part of a ROBS—you rollover your existing 401(k) retirement account into a retirement plan in your business’s name. Many new businesses don’t offer a 401(k) program, but when yours does, you’ll attract eager applicants who will be happy to work for your company.

Leave Your Personal Credit Alone

Because a ROBS plan isn’t a loan, your personal credit score remains untouched. Your credit score is not used to determine your eligibility for a ROBS. If your business takes a little longer to succeed, you won’t see any repercussions with your personal finances. Rolling your 401(k) over acts as a concrete separation of your personal credit and your business dealings.

When you take the plunge and start your own business this year, consider utilizing a ROBS to secure that startup capital. There are plenty of benefits to a 401(k) ROBS plan in 2022, so take a look at your finances and decide whether it’s the right choice for you.