If you’d like to use your own funds to give your small business a boost, you may be in luck—several common retirement plans work with rollover business financing, or ROBS (Rollover for Business Startups). Stand on your own two feet by using one of these retirement accounts to fund exciting new business ventures.
Do you have a traditional 401(k) retirement plan from your day job? Once you’re ready to quit the rat race and go into business for yourself, think twice before cashing out that plan. Use 401(k) small business financing to roll your funds over into a new account in your business’s name. This process will help you avoid early withdrawal fees and taxes imposed on that hard-earned money.
If you work for your state or local government, your retirement funds may be in a 457(b) plan. ROBS also works well for these funds. Enlist a financial expert to help you roll that money over into a new account.
Employees of public schools, churches, and some nonprofit organizations may have their retirement funds invested in a 403(b) plan. When you put in your two weeks’ notice and prepare to become a full-time small business owner, don’t withdraw all that money to fund your business. Transfer it to a new retirement account for your business via a ROBS.
Many individual retirement accounts (IRAs) are also eligible to be used for ROBS. Are your retirement savings invested in one of the following?
- Traditional IRA
- SIMPLE (Savings Incentive Match Plan for Employees)
- SEP (Simplified Employee Pension)
These retirement accounts all qualify for a Rollover for Business Startups. However, some, like SIMPLE plans, require you to contribute to the fund for at least two years before rolling it over. Read the fine print on all your retirement plan documents if you’re unsure of the plan’s eligibility.
While Roth IRAs are great for people who want to make tax-free withdrawals from their retirement accounts, these options are not eligible for a ROBS.
Are you ready to put your retirement fund to good use? If your retirement plan works with rollover business financing, it can be a powerful source of capital for your small business.
If you’d like to learn more about funding options for your business, take advantage of Pango Financial’s funding solutions tool today.