If you’re looking to start or scale a business, it’s important to have ample funding.
Leveraging your 401(k)/IRA to start or scale a business is a valuable way to use your existing resources without saddling your venture with debt. But there are important dos and don’ts to the common business practice known as ROBS funding. What are they? How can you follow the rules while reaping all the benefits of ROBS funding?
Do’s for ROBS Funding
Unlike traditional business financing, ROBS funding isn’t a straightforward loan funding process; in fact, it’s not a loan. And, if used properly, is an incredible resource for funding the business without loan repayments, tax, or early withdrawal penalties. Here are some of the ways you can make ROBS funding work for you. Here are some of the important rules to follow:
Don’ts for ROBS Funding
Thousands of businesses launch or scale-up each year by using the Rollovers as Business Start-Ups (ROBS) strategy. It’s a unique way to use qualified retirement funds to finance a business. While it is a simple and legal process, there are very specific guidelines that must be followed to remain compliance with IRS/DOL regulations. Missteps that can cause issues include this list of don’ts:
Benetrends specializes in helping businesses properly follow the dos and don’ts of ROBS funding. Find out how we can expand your business financing options. Schedule a consultation or download The Definitive Guide to 401(k)/ROBS Business Funding to read more about it.
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