How To Use Your Retirement Funds
The innovative Rainmaker Plan from Benetrends was the first retirement and business funding plan created for small business. Benetrends originated 401(k)/IRA rollover funding helping over 17,000 entrepreneurs in the last 35 years, with our revolutionary Rainmaker Plan®. The Rainmaker allows an entrepreneur to use their qualified retirement plan to purchase, or recapitalize a business or franchise, tax deferred and penalty free.
Rainmaker Plans are used by entrepreneurs to start new ventures, purchase franchises or existing businesses, expand or add locations to current organizations, and to provide additional working capital for current operations.
The process begins with the establishment of a new corporation. As part of our services, Benetrends takes care of the set-up of this new C Corporation using the proper legal structure that supports the establishment and operation of the company's qualified retirement plan.
Next, Benetrends designs a retirement plan for the new company. Benetrends will design this plan using specific features that are right for you and your business. These features will be determined during an up-front needs assessment session with an expert Retirement Plan Analyst from Benetrends.
The new company then adopts the qualified retirement plan. The company's new retirement plan is designed to allow rollovers from most other types of retirement plans. This allows you and your company's employees the option to rollover current retirement funds into the new retirement plan tax-deferred and penalty-free. You and the other plan participants that have rollover money then direct how these funds are to be invested for your own individual accounts.
The Rainmaker Plan design allows rollover contributions (and only rollover contributions) to be invested in the stock of the new company that sponsors the retirement plan. If you or other plan participants direct the investment of your rollover contribution in company stock, the plan then purchases stock in the new company. The company stock purchased by the plan is credited to the individual accounts of the plan participants per their investment decision. Remember, only rollover money can be invested in company stock.
For example, suppose you have $250,000 in an existing retirement plan and you require $150,000 to purchase a new business. Using the Rainmaker process, you can roll the entire $250,000 into your new company's retirement plan. You would then direct $150,000 of the rollover to be invested in company stock.
The remaining $100,000 in the plan can be invested in other stocks, bonds, or mutual funds, depending on the investment options adopted by your plan. Your new company ends up with $150,000 in cash that it can use for any legitimate business purpose, including payroll, rent, marketing, supplies, salaries, furniture and fixtures, and more. The plan ends up with company stock valued at $150,000 which is credited to the accounts of the individual who directed an investment in company stock from their rollover monies.
You and your employees will utilize the new plan to build personal wealth, plan for your retirement, and build wealth for the company. The retirement planning experts at Benetrends will help you determine how to get the maximum benefit from your plan and the best way to achieve your long-term goals.
Just like other qualified plans, rollovers, wage deferrals or contributions can be invested in other investment options such as stocks, bonds and mutual funds giving plan participants the ability to diversify their portfolios.
Although Benetrends does not provide investment advice, you may use your own financial advisor to determine what other types of investments to offer through your company's new plan, or you can enlist the services of one of Benetrends nationally-recognized partner firms.
If at some point you find you need additional funding for the company, you have the option to re-direct some or all of the $100,000 from the original rollover into additional company stock.
Benetrends will be doing more than you know to help you protect your assets and maximize your benefits. As you consider funding your business, the team at Benetrends will help you evaluate options other than the simple rollover process provided by many firms in this industry.
Depending upon your individual situation, it may be best for you to use a combination of business loans and retirement plan funds to start your business. These types of decisions have bearing on how quickly your business will arrive at break-even or profitability, or how great your debt expense will be. It's our goal to help you use your retirement plan to succeed in business both now, and in the future.
For instance, you might rollover all of your current retirement plan funds into the new retirement plan, but only use a portion of it to invest in the new company's stock. The benefit of doing so is to provide your business a cushion for later, in the event that you need additional working capital. Down the road, if your company needs a capital infusion, it may not be easy to get a business loan at that time.
If you carefully direct your funds at the time of the rollover, you can purchase additional stock later for just that type of capital infusion. Benetrends is an expert in this area. And remember, at the core of each Rainmaker Plan is an operating qualified retirement plan to be used by you and your employees to save for your retirement. It is the qualified retirement plan and the rules that govern the plan that allows the investment of rollover funds in your business.
At Benetrends, we create and administer retirement plans for companies with thousands of employees and for companies with fewer than five employees, and we provide each and every one of those corporations with the same level of individualized, sophisticated plan design. While you may find that other companies sell a specific type of plan -- like a 401(k) or 401(k) plus profit sharing -- Benetrends doesn't sell off-the-shelf or cookie cutter plans.
You'll begin our process with a comprehensive interview with a Retirement Plan Specialist. This Specialist will help design the very best retirement plan for your particular situation which may include any combination of plan features.
Our goal is to design a plan that provides you the maximum benefits, and to consult with you and educate you regarding exactly what those benefits are. Most large businesses use Third Party Plan Administration (TPA) services to help keep their retirement plans in compliance, and to receive the maximum benefits from their plans.
At Benetrends, it's these services that set us apart. Just as with plan design, we provide ongoing support and administration to companies large and small. And you'll receive the same level of service and expertise as our clients who have thousands of employees. At Benetrends, we are in business to help you achieve long-term success. We also realize that a retirement plan is a complicated arrangement that needs to be built for the long-term. So, we're in it with you for the long-haul. We provide proactive services such as communicating with you when your employees become eligible for plan enrollment and providing you with required materials for those employees.
We'll also review your account statements to identify transactions that might trigger tax penalties or code violations, and conduct yearly plan reviews using the same standards as the IRS. We find that many of our clients don't even realize what an asset their retirement plan can be. So, we'll provide you with proactive consultation regarding how to use your retirement plan to build wealth and minimize tax expenses in accordance with Internal Revenue Code.
We'll even help you design retirement plan benefits for your employees - something that's rarely seen in small business. So you can attract and retain the very best team members for your company. At year-end, we'll work with you regarding strategies for how to handle corporate profits, dividend payments and bonuses to help minimize tax exposure and remain in accordance with tax code. And while you're considering opening a business today, you might not be considering your exit from that business.
The fact is, you're eventually going to exit your business. And when that happens, your retirement plan needs to be part of your exit strategy. Your Benetrends team of experts will work with your accountant to tailor-make a strategy to help you accomplish your desired results, at the lowest possible tax cost. Following your initial rollover transaction, each and every one of these Benetrends services are included in a single low monthly charge.
Many other firms may quote you a yearly fee, only to surprise you with additional charges for costly restatements, estimations of your company's fair market value, plan amendments required when laws change and other government filings, to name just a few.
At Benetrends, these things, and more, are all included.
All the MORE reason to choose Benetrends.
Benetrends was founded in 1983 by one of the foremost ERISA attorneys in the nation - and he's still a part of our company today. Since that time, our team has grown to include members in every facet of retirement planning. And our team members remain on-call for you free of charge for as long as you remain a client of Benetrends.
If you're working with a business broker, franchisor or franchise consultant, we'll work right alongside you, ensuring consistent communications and timely completion of the Benetrends process.
We'll also work with your professional services providers (attorneys, accountants and tax professionals) to make sure that our process is fully understood, and meets the needs of you and your company.