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Traditional 401k Rollovers
Using your existing 401k to invest in a franchise is more common than most people think. A traditional rollover allows you to move funds from an employer sponsored retirement account into a new qualified retirement account without triggering taxes.
This option can help you access capital for your business while continuing to keep your funds in a retirement-protected environment. Many Polar Tint franchise owners use this approach to provide their down payment or to reduce their need for outside loans. It is important to speak with a financial professional to understand how a rollover works and how it fits into your long-term retirement strategy.
ROBS Program (Rollover for Business Startups)
A ROBS program allows you to use retirement funds to start or purchase a business without incurring early withdrawal penalties or immediate taxes.
What is ROBS
A ROBS structure lets you invest your retirement savings directly into your own business. Here is the general process.
- You create a C Corporation
- A qualified retirement plan is established for the new corporation
- You roll over funds from your existing retirement account into that plan
The plan purchases stock in your corporation to provide startup capital
Example
Imagine you have two hundred fifty thousand dollars in an existing retirement account and you need one hundred fifty thousand dollars for your Polar Tint business.
You can roll all or part of your retirement funds into the new company plan. If you roll the entire amount, one hundred fifty thousand dollars can be used to buy stock in your new corporation, giving the business the capital it needs. The remaining one hundred thousand dollars can stay invested in other assets such as mutual funds or bonds.
Your new Polar Tint then has one hundred fifty thousand dollars available for legitimate business expenses, and your retirement plan holds company stock along with any other investments you keep within the plan.
Why consider a ROBS
Without a ROBS structure, withdrawing funds directly from a retirement account before the eligible age would create income taxes and a ten percent penalty. A ROBS program avoids those immediate costs and allows you to use retirement assets as a business investment.
Contact us to learn more about financing options for starting your Polar Tint location!
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