Did you know that buyers may use their IRA or 401K funds to buy a business and not pay taxes or penalties at the time of the transaction?(You need a specialist to make this happen, but it can be done atminimal cost!)

There are many, many rules and of course some exceptions. If done properly, however, you can basically use your own retirement funds, tax-free, to fund the purchase of a business.

Don't let your IRA funds "lie around"... put them to use in your transaction.

This mechanism, called a "self-directed distribution" works this way:

First you retain a specialist to make sure your plan qualifies, then follow these few key steps:

There is a fee of $3,000 to $4,000 required to set this up. Filing and other fees of approximately $1,000 and a small annual management fee will be incurred to assure future regulatory compliance. However, when compared to paying up to 50% in taxes plus 10% in early withdrawal fees, this is a very small expense and can enable a buyer to leverage his/her funds to develop the business ownership.

It sounds simple, but careful technical navigation is critical to insure that you do not violate any IRS rules that would result in a substantial penalty. Done correctly this technique can unlock substantial investment funds for use in an acquisition!

– 1. Buyer will need to incorporate if they are not purchasing the stock of an existing business(This is a normal acquisition process step: File IRS Form SS-4 to obtain Tax ID #; Open a Corporate Checking Account.)

– 2. The "Expert" then assists you with the establishment of the new 401K Trust and will direct you to open a Trust checking account also;

– 3. Upon separation from their present employer, the buyer will have their retirement funds directed to their new Trust account;

– 4. The Trust then writes a check to purchase the shares of the newly formed corporation(if it's an asset purchase)or the shares of the corporation being purchased(if it is a stock acquisition);

–5. The new corporation now has the funds in its account and issues the corporate shares to the Trust and the deal is done "tax free".