Retirement Funds Detroit MI

When it comes to owning and operating a business, finding the right form of financing can be an arduous task. Where do you find the necessary funding to seed a business, buy a new one, or raise additional working capital?

Traditionally, business owners have used bank loans, SBA loans, personal loans, credit cards or home equity to satisfy their funding needs. The biggest downside to these sources of financing is the debt load and corresponding payments. Additional debt can impair your ability to access money in the event that "life happens."

This is why the idea of using retirement funds to inject cash into a business has been gaining popularity. Although few know about this new concept, if structured correctly it allows for an individual's retirement account to invest directly into their business venture... without taking a distribution and paying taxes and penalties.

The Background

The IRA and 401(k) was created in 1974 when congress passed the Employee Retirement Income Security Act (ERISA) to address concerns that private pension funds were being mismanaged and abused. The IRA and 401(k) transferred the responsibility of retirement investing from the employer to the employee. The rules surrounding these plans are complex; however, the laws state that there are only two types of investments into which retirement plans are prohibited from investing: life insurance and collectibles.

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