401k Business Financing California

Are you an aspiring entrepreneur looking for financing to open a business in California? If so, you may want to consider using our 401k Business Financing plan which allows you to invest your retirement funds in your business without paying taxes or penalties.

Benefits of 401k Business Financing Plan (Rollover as Business Startup (ROBS))

  • You can invest all of your retirement funds in the business without paying taxes or penalties. If you were to withdraw the funds from your retirement account, you will have to pay a 10% penalty (if you are under 59 ½) and income tax which often leaves only 60% or less of the amount withdrawn available to fund your business.
  • The funds invested in your business do not have to be paid back to your retirement account (i.e., it is not a loan).   With no repayment obligation, the business is able to keep more of the income in the business which can be very important to a growing startup business. Moreover, by investing your own funds you are able to independently fund your business and retain ownership and control.
  • There is no credit check required to access your retirement funds.
  • The funds are typically available for business financing in 10-15 business days.
  • Other than Roth IRA accounts, funds in virtually all types of retirement accounts are eligible including 401k, Traditional IRA, pension plans, government plans, etc.

Process

Step 1: File Articles of Incorporation with the California Secretary of State.

Step 2: Obtain Corporation and 401k employer identification numbers (EIN).

Step 3: Open business bank account for the California corporation.

Step 4: California corporation adopts new 401k plan.

Step 5: Transfer funds from your existing 401k, IRA or other retirement account to the new 401k.

Step 6: Fund the Corporation with the new 401k proceeds.

Other resources:

Register ROBS Corporation in Another State  QUESTION:

Can the C-corporation that will be funded with my ROBS 401k be filed in Nevada?

ANSWER:

f the corporation will conduct business in California, you will need to register the NEVADA corporation in CA (i.e. registered as a foreign corporation).  Please note that you should also consult with your business and tax advisers as this may raise licensing, tax and/or other legal/tax issues.

For these reasons, the vast majority  simply elect to register the business in the state where the business will be operating.

Change of C-corp business Address QUESTION:

I need to change my ROBS 401k funded business address.  I believe I can change it fairly easily with a change form with the CA SOS, but I’m not sure how to do it. Do you know?

ANSWER:

Please see the following regarding changing the address for your California corporation. Form SI-550 applies.  Please note that it would be prudent to discuss with your local business legal and/or tax adviser(s) whether there any additional state and/or local requirements (e.g. for licenses, state taxes, etc.).
https://www.sos.ca.gov/business-programs/business-entities/faqs/#annual-question4  [Note: you will want to change for the resident agent address as well.]

 

  • We’re here to help.

    Call: 800-489-7571

    Monday-Saturday

    7:00 am - 5:00 pm PT

    Why us?
MENU