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Use Your 401K Funds For Cash Flow With No Taxes or Expenses (Houston, TX)

Posted by DRDA CPA's in HOUSTON, TX on Jun 14, 2009

A CPA firm based in Houston, Texas has discovered a unique way to use your 401k to obtain cash-flow for your business without going into debt. There is a provision in ERISA (Employee Retirement Income Security Act) that allows you to rollover your 401k into new business venture with no taxes or penalties.

DRDA is a CPA firm in Houston that has come up with the BORSA (Business Owners Retirement Savings Account) Plan to take advantage of this provision. If you need to obtain cash-flow for your business and other options have left you frustrated then this may be the plan you are looking for. Basically, you’ll be investing your retirement plan in yourself and your new business.

The BORSA Plan and Your 401k Retirement Savings

First of all, you don’t have to reside in Houston to take advantage of DRDA’s expertise in setting up and administering BORSA. The provision is available anywhere in the United States and can be administered at a distance. Many CPA’s and lawyers aren’t even aware this provision exists, so be careful who you hire to make your documentation compliant with the IRS. You could be on the hook for taxes and penalties should non-compliance become an issue. Below is a general synopsis of how the BORSA Plan works.

The ERISA Act allows business owners to use their IRA, 401k, or other qualified retirement monies to invest in their own company with no taxes or penalties being applied. In fact, you don’t even have to “tap” into your cash-flow to repay the amount. It is an investment in your business not a disbursement of your retirement funds.

You’ll need to set up a C-corporation and become an employee of the new business. The new corporation will set up a 401k plan that allows the rollover of existing retirement funds into the new account. Your retirement funds will be transferred to your new businesses 401k plan. It is a self-directed retirement plan where you invest in yourself and your retirement as well as your business.

The newly formed 401k then buys stock in your new corporation. The corporation uses the new investment as cash-flow to operate the business. You’ll require a third-party appraiser to determine the value of your business and the corresponding stock price.

Your new company will have much needed cash-flow and, assuming there is no other financing, will be debt-free. A balance sheet like that will enable you to borrow in the future should you need to.

As you add employees you’ll have to offer them the opportunity to invest in your company’s 401k plan under the same terms that your retirement fund invested in your company. This is a compliance issue and must be adhered to.

You’ll require initial and ongoing compliance from a qualified CPA to ensure there are no unexpected taxes or penalties assessed.

IRS Compliance Issues

All employees of the business must be allowed to participate in the 401k plan.

There needs to be an accurate valuation of your business preferably from a reputable 3^rd party.

The new 401k plan must be permanent. To be considered a permanent retirement plan there must be regular contributions being made from the owner. Otherwise they may deem it to be a distribution of funds with all taxes and penalties being applied.

Details of the plan must be properly communicated to new employees of the business. They must be offered the opportunity to participate in the 401k plan.

Pick up the phone right now and call 281-606-5719 !! It's your money, your dream, and if you believe you have a solid business idea and are willing to put your all into bringing it to life then you deserve access to your own money without tax or penalty! The BORSA Plan will do that for you. Call now at 281-606-5719 and ask for Suzy Granger. If it's after normal business hours then leave a message, or fill in the short form below. Either way, your inquiry will be returned immediately upon resumption of regular business hours. Get the money you've already earned and start your dream, now!

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