Dreaming of Owning Your Own Business, But Lack the Down Payment?

With companies downsizing and displaced formeraccount are rolled in to the newly created retirement
executives searching for a new niche, the desire toaccount. These funds are used to invest in stock of
maintain more control of their futures is becomingthe company or provide a down payment on a
more important. Business ownership, because of itsbusiness according to an article in the Wall Street
nature is very appealing.Journal Article, Funding a Start-up - How to Tap an
But the down payment needed may be just out ofIRA or 401(k)
reach for many of these people. You may be in thatA cautionary note, however, the account should be set
position and the following has crossed your mind.up with the guidance of a financial planner or third
"Where can I come up with necessary funds for aparty retirement plan administrator and those fees can
down payment on a business? Especially a businessbe steep. Typically the set up fee is around $5,000.00
that returns the net income I need to maintain myand an annual administration fee of around $800.00.
current lifestyle?"But if the account is not set up correctly, you could be
The answer may lie in your 401(k), 403(k), Keoghs orsubject to taxes and early withdraw penalties. This is
SEP accounts. Through an instrument called theespecially true if you are under 59 1/2 years old. No
self-directed IRA, an account can be created thatruling has been issued authorizing the self-directed IRA,
could be used to fund a down payment for a businessso consultation with an expert in this process is
or fund the operating costs of an existing business,advisable.
helping to lower overhead and increase profits.Disclaimer: The author is not a financial adviser or
The process involves setting up a C Corporation andCPA. It is important to consult with your CPA or
setting up retirement accounts. Funds from the IRAfinancial planner.