Retirement Funds to buy a business…

NO WAY!!.... but maybe...

by Kelly Krueger

Have you ever?

• Had a job with a retirement plan? • Contributed to a company retirement plan? • Changed jobs and rolled over your retirement funds into the new company’s plan? • Purchased employee stock?

If you’ve done any of these, then you already understand the basic principles of a ROBS or Rollover as Business Startups. The difference between a traditional retirement plan and a ROBS strategy is in the way the retirement funds are used.

With your traditional 401(k)/IRA, you are investing in your future wealth by growing your savings through contributions. When you reach retirement age, you can tap into your funds and any pre-tax contributions will then be taxable. And if you work for a company that offers stock, you have the option of purchasing shares. Should you want or need to tap into your retirement funds, you may be able to, provided the company allows withdrawals (i.e., loans, in-service or hard- ship distributions); however, the monies will be subject to taxes and possibly early withdrawal penalties that can be upwards of 40 percent of the distribution.

A ROBS strategy, on the other hand, is an investment in you and your business now. Qualified retirement funds are rolled into a retirement plan sponsored by a newly created C-Corporation – your company. These funds are used to purchase stock in the company, and the proceeds are then used for the business. With this strategy, there are no loan repayments, taxes or penalties.

“A ROBS strategy, on the other hand is an investment in you and your business now.

There are guidelines that must be followed, and the plan must show permanence, which can be achieved by contributing to the retirement plan which in turn rebuilds your wealth for the next adventure – your retirement.

Kelly Krueger is a Benetrends is the pioneer of ROBS funding, helping thousands of entrepreneurs launch their business dreams for nearly 40 years. To learn more, schedule a consultation.

Kelly Krueger is a Senior Consultant at Benetrends Financial with over a decade of franchise and business funding experience. Benetrends has been a leader in the financial services industry for nearly 40 years, helping entrepreneurs understand their funding options and develop smart capitalization strategies. Kelly has a well-rounded, empathetic approach to assisting her clients.

Prior to her position as a Sr. Consultant, Kelly was a Financial Services Professional with Prudential; where she earned the following professional licenses: Series 6, Series 63, Life & Health. She also worked as a Pharmaceutical Specialty Sales Professional for near 14 years for both Schering-Plough and Sanofi-Aventis. Contact Kelly at 267.328.1296 or kkrueger@benetrends.com.