Use Retirement Funds to Buy a Business

Business For Sale

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It’s a common situation: You have been doing a good job of saving for retirement and so there’s a considerable amount that’s accumulated in your retirement accounts…but you don’t have a boatload of liquid money just sitting around in a checking or savings account. You’ve also been thinking to yourself, “Hey self! Wouldn’t it be great to buy a business?” Your self responds, “ Sure. It’s just that all the money I would use for a down payment is tied up in retirement accounts, and the taxes and penalties for withdrawing it wouldn’t be worth it.” The good news is that you’re only partially correct. Withdrawing the money early from retirement DOES incur some hefty penalties, but what if you could use it without needing to withdraw it? We can help. Read on.

We recently helped a person buy a business using the funds in their retirement plan for the down payment without incurring any early distribution taxes or penalties. Really? Yes, really. We have used this method with several buyers. It’s a common misconception that we are limited to publicly traded stocks or mutual funds in our retirement plans. In reality, any qualified retirement plan (most plans except the Roth IRA) can be used to purchase a business, expand a business, or provide working capital. We work with several highly respected providers that manage these programs and we match our clients with the right provider at no cost to them. Here are a few of the benefits:

1.  No early distribution taxes or penalties (this is huge!)

2.  Minimize (or eliminate) the debt you will incur because you’re using your own money.

3.  Up to 100% of existing funds are available for use.

4.  The program is created, designed, and administered by experts who have been doing this for over 30 years. Selecting the right provider is extremely important.

5.  The process is IRS-approved so long as the plan is properly structured and you maintain operational compliance. Reference #4 above.

6.  The Small Business Administration (SBA) has authorized the use of these structures as acceptable equity injections that meet federal guidelines.


If you’re interested in buying a business and you aren’t sure how you’re going to pay for it – contact us. We will sit down with you and your advisors (attorney, accountant, financial planner, etc.) and talk about how these programs work. This is one of many solutions we have to help you get where you want to go!