Use your 401k Tax & Penalty Free (to buy your own business)

No Penalties!
For most Americans their 401k represents a large portion of their net worth. What many don't realize is they can use these funds to acquire or purchase a business even before the turn 59.5 without the penalties. While SBA funding and other bank loans may be in consideration one should consider their options and weigh the closing cost involved. Sometimes using your own savings makes perfect sense.
Get cash out of your 401(k) or IRA to help finance your new business, without creating a taxable event.
Say you have $100,000 in a 401(k) or IRA and take an early distribution (before age 59.5), the following taxable events would be triggered: a 20% mandatory hold-back, Federal (and state) income taxes (at higher tax rates) and a 10% early withdrawal penalty. This could easily be a $45,000 tax bite.

Take early distribution Adopt Self Directed Retirement Plan
Amount in retirement fund:___________ $100,000 ________$100,000
Mandatory 20% withholding: __________$20,000 _________0
Cash available to withdraw: ___________$80,000 _________$100,000
Less ordinary income taxes (at 33%) ____$33,000 __________0
Early distribution penalty (10%) _______$10,000 __________0
State income taxes ________________$2,000 ___________0
Total taxes & penalties: _____________$45,000 __________0
Cost to set up transfer trust: _________$5,000 estimated
NET CASH available: ______________$55,000 ____vs.____ $95,000

With the adoption of a Self Directed Retirement Plan, you are able to convert existing retirement funds into privately-held stock in your new business. This tax-deferred trust is coupled to a replacement plan that contains special "exemptive clauses." Your new business gets the cash it needs from the sale of a portion of its stock to your trust plan. The trust is unique in that it will provide custodial services to administer non-publicly-traded stock. Call Vince LoCricchio Enterprise Business Brokers (813) 690-0109