fun·ding /‘fəndiNG/noun
1. The action or practice of providing money for a particular purpose. 2. Sound advice from Dallas Kerley
A retirement plan may be all you need to launch your dream
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ntrepreneurs are dreamers, innovators, and go-getters. They are driven enough to start their own businesses. Many, however, lack the funding needed to open the doors. Or, do they? There are plenty of ways to fund a franchise. Yes, you can borrow from the bank or find investors; of course, that means you’ll be starting your business in debt. But what if you had a pile of cash that allowed you to start your franchise cash-rich and debt-free? If you have money in a qualified retirement plan, you are cash-rich and can fund your franchise with a process known as Rollovers for Business Start-up (ROBS). HOW DOES ROBS FUNDING WORK? A Rollovers for Business Start-up plan lets you use existing qualified retirement account funds, such as a 401(k), 403(b) IRA, or other qualified retirement vehicle, to fund your franchise tax-deferred and penalty-free. Because of the way a ROBS is structured, you can still contribute funds to a tax-advan26
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taged retirement account as your business grows, enabling you to continue to plan for your retirement. HOW DO I GET STARTED? Using retirement funds for your start-up involves four key steps: Step 1: Establish a Corporation. In order to be eligible for a ROBS arrangement, you must form a new corporation. Step 2: Create a New Retirement Plan. The corporation will sponsor a new retirement plan that has provisions allowing investments in the parent corporation stock. Step 3: Transfer Retirement Funds. Once the plan is established, your existing retirement funds will be rolled over to the new plan. Because the funds are rolling from one qualified plan to another, no taxes are due and there are no withdrawal penalties. Step 4: Launch the New Business. Once stock is purchased in the new corporation, you now have the cash to invest in your new franchise.
