There is a CPA firm in Houston that specializes in borrowing and investing money from your 401k into your small business. You see, there is a little-known section of the ERISA Act that allows individuals to use their retirement funds to finance a small business venture.
Let’s face it, jobs are disappearing and it’s going to take the creation of small businesses to pull ourselves out of this financial crisis. The BORSA (Business Owners Retirement Savings Account) Plan may be the tool to take your business idea and turn it into reality.
Financial institutions aren’t lending money for start-ups because they can’t tolerate any risk. They have had no problem investing in worthless mortgages and other paper but funding small business - the “economic engine” of the country - is considered too risky. While those forms of borrowing have dried up there are a couple of ways to access your 401k to invest in a small business start-up. The first is borrowing money against the assets in your 401k and the other is to invest your retirement funds into your small business using the BORSA plan that was developed by a Houston CPA firm.
Borrowing Money from Your 401k to Fund Your Business
The IRS allows borrowing from an individual’s 401k without taxes or penalty providing the loan is repaid within five years. While the government allows this type of loan, your plan administrator may not. It is allowable under tax law but not mandatory, so check with your plan administrator.
Assuming it’s a go and you can begin borrowing from your retirement fundsthere are a few things to consider in regards to this type of business financing. Under law, you can only borrow 50% of the vested portion of your 401k up to a $50,000 maximum. If you are leaving your job to start up your new business, you’ll likely have to transfer your 401k from your old plan. This means you will have to set up a 401k plan for your new company.
In addition, this type of borrowing requires you to make quarterly loan payments back into your 401k. This is going to require using profits or working capital to pay back the loan. It’s not going to help your business if you are under immediate financial pressure to make these loan payments. If you do default on the payments, the IRS is going to be knocking at your door for taxes and penalties.
The BORSA Plan: No Debt – No Repayment
The BORSA Plan was formulated bya Houston CPA firm, DRDA. It allows you to take the funds from your 401k and invest them into your business. The big difference here is that you don’t have to pay it back. You’re not borrowing the money; it is invested in shares of the new company.
While not an overly complicated process it should be stressed that a qualified CPA and lawyer are highly recommended. We all know what the IRS is like and if the initial setup is non-compliant you will be looking at taxes and penalties. There are benefits to BORSA over borrowing from your 401k to finance your small business which include:
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 right now!
