Using Retirement Money to Buy a Business or Franchise?
The guest on my radio show on April 30, 2013 was Monty Walker who’s the principal of Walker Advisory Services. Monty’s company specializes in a number of unique services for business owners or those wanting to become a business owner. One of these services is setting up and then managing a plan for a new entrepreneur to buy a business or franchise with money they already have in a 401k or IRA to fund the initial purchase. Once the entrepreneur becomes a new business owner, they can then invest and grow their business and then when they are ready, sell the business and use the proceeds from the sale to fund their retirement.
With the global and national economies moving out of recession, a strong trend is developing from those that have been working in Corporate America and are between the ages of 35 and 50 and built a 401k or IRA plan to decide that corporate life has been nice but there is more. Many executives in corporate America have built a strong skill set and have an interest to test their entrepreneurial skills and so this is one of the services Monty Walker and Walker Advisory Services can assist.
The use of 401k and IRA plans is highly regulated by both the Federal Department of Labor and the IRS. This is because the money in a 401k and IRA plan has been given special tax treatment as its purpose is to fund the retirement of the investor. To therefore allow this money to be used before the investor retires requires following and meeting strict compliance requirements. To help the entrepreneur correctly use their funds, Monty and his team handle all the Plan Administration and act as a Fiduciary as well as meet all the Compliance requirements of both the Department of Labor and IRS.
During my conversation on air with Monty I asked him some questions and here are his answers.
What’s the name of this service you provide? It’s called the Entrepreneur Retirement Plan of America.
Can this money in the retirement plan be used with other money to buy a business or franchise? Yes – this money can be used along with any cash as well as an SBA loan or other loan source to buy a business or franchise.
How much does it cost to setup a plan? The initial cost is approximately $4,500 then an additional monthly fee applies to manage the plan investments and to meet all compliance, cover the cost of annual Third Party Procedural reviews, regulatory amendments and updates as well as unlimited plan related consulting.
Are most CPA’s that handle tax returns and other tax professionals familiar with this type of plan? No. As Monty explains, it normal for him to introduce the Entrepreneur Plan of America program to a CPA, explain it structure and compliance. Monty welcomes a conversation from the business buyer’s CPA or tax professional so they understand how everything works.
The Entrepreneur Plan of America program meets the needs of a very small number of business or franchise buyers as it only helps those with money in a 401k or IRA. If you want more information there is a 12 page PDF available to download from my website by clicking the following link https://www.rogersonbusinessservices.com/pdf/RSPT%20Preview%20Package.pdf
If you prefer, you are welcome to listen to my conversation with Monty on my radio show and you can do this by clicking on the following link – ERPA conversation with Monty Walker