401K Business Financing New York

Are you an aspiring entrepreneur looking for financing to open a business in New York? 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will have to pay a 10% penalty (if you are under 59 ½) and income tax which often leaves only 60% or less of the amount withdrawn available to fund your business.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 Certificate of Incorporation with the New York Secretary of State.

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

Step 3: Open business bank account for the New York corporation.

Step 4: New York 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:

Processing Times fo C-corporation QUESTION:

How long does it take to register the C-corporation that will be funded with the business financing 401k plan in New York?

ANSWER:

The typical processing times for filing the Articles of Incorporation with New York is one business day.

DBA for C-corporation QUESTION:

Can my ROBS 401k funded C-corporation file for a DBA?

ANSWER:

New York businesses that conduct business under a name that is not their legal name need a Certificate of Assumed Name. This certificate is also called the “doing business as (DBA) certificate.” Businesses must file the certificate with the New York State Department of State (NYSDOS).

For more information regarding the process for the Certificate of Assumed Name visit: https://www.dos.ny.gov/corps/assdnmins.html

Change of Address for C-corporation QUESTION:

How can I change the address of my corporation funded 401k plan . It’s currently my home address, but since it’s public record and now that I have a physical address I’d like to update with my business address in New York.

ANSWER:

This is Corporate rather than 401(k) question. As such, you should directed to your local legal and or tax advisers. For example, you may need to update certain regulators etc. As far as changing the address of the New York corporation, this can be done at the New York Secretary Of State. Typically, this can be handled as part of the annual report for the corporation. If you want to change before then, you would likely need to file an amendment to the articles of the corporation to update the registered agent address.
See the following link for more info regarding changing address of the business and registered agent

Use the Funds for Real Estate Business QUESTION:

Can I use the ROBS 401k funded corporation for real estate?

ANSWER:

If you want to use your funds for real estate,  it must be a real estate operating company and the following rules apply:

 

1) The New York State corporation that you invest your ROBS 401k retirement funds in may invest in real estate that satisfies the following requirements:

  1. At least 50 percent of the assets of the business, valued at cost, must be invested in real estate which is managed or developed and with respect to which such entity has the right to substantially participate directly in the management or development activities.
  2. Such an entity in the ordinary course of its business must be engaged directly in real estate management or development activities.

2) Expenses related to the real estate will be paid by the corporation.

3) The real estate will not be used for personal use.

4) There may be periods of time when the 50% test described in 1(a) above is not satisfied.  This confirms that it would be acceptable as long as the 50% test is satisfied on the following dates: (i) the “initial valuation date” or the first date on which the corporation makes an investment that is not a short-term investment of funds pending long-term commitment; and (ii) at least one day during each annual valuation period.  An “annual valuation period” is an annually recurring period of not more than 90 days that begins no later than the anniversary of an entity’s initial valuation date. For example, if the corporation’s first long-term investment is made on October 3, 2017, that date is its initial valuation date. The first annual valuation period can commence as late as October 3, 2018. An annual valuation period that commences on October 3, 2018, would end on December 31, 2018, and recur each October 3 through December 31 thereafter. Once an annual valuation period is established it may not be changed except for good cause.


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