401k Rollover to business startup | 401k rollover as business startup | Real Estate Operating Company

QUESTION: Do you know if I can rollover my 401k retirement money to fund a real estate business startup? I have over 10 years experience in the real estate business world managing and developing real estate and now I’m ready to put my knowledge to work for me instead of some other business owner.

Truly yours,

Jason P. in Florida

ANSWER:  Commonly referred as 401k small business financing, yes the IRS 401k rules allow for the use of your 401k funds to start-up a business without being subject to distribution penalties. Your exiting 401k funds would be processed as a direct rollover to a new 401k sponsored by your new C-Corporation real-estate operating company.  The operating company rules in connection with real estate must be satisfied so make sure to work with competent compliance professionals if you decide to pursue the use of 401k rollover funds to finance a start up. To give you an idea of the requirements, at least half of the Corporation’s assets would need to be invested in real estate that is directly managed or developed by the Corporation.

About Mark Nolan

Each day I speak with energetic entrepreneurs looking to take the plunge into a new venture and small business owners eager to take control of their retirement savings. I am passionate about helping others find their financial independence. Having worked for over 20 years with some of the top retirement account custodian and insurance companies I have a deep and extensive knowledge of the complexities of self-directed 401ks and IRAs as well as retirement plan regulations. Learn more about Mark Nolan and My Solo 401k Financial >>

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