You can utilize a Versatile Entrepreneur Retirement Savings Account Plan (VERSA Plan). The VERSA Plan structure allows you to rollover your 401(k), or other qualified plans, into the equity of a new or existing business without the burden of taxes or penalties.
Frequently, we are asked if the VERSA Plan is a loan. No, it is not a loan. Instead, it is equity. In addition, it meets all of the equity requirements of commercial lenders and the SBA alike. The capital that is rolled into the VERSA Plan is used to buy the equity of the company just as you would buy a mutual fund or a stock in your qualified plan. That stock is then held in the plan for the benefit of the business owner.
There is one caveat, though. Your new company needs to be set up as a “C” corporation by the lawyer who sets up the VERSA for you. We at Bankers Advocate have used the VERSA numerous times for Entering clients or Entering Buyers to access their retirement funds with no tax penalty.
If you have any more questions about using the VERSA Plan to buy a business, feel free to give us a call at 866-598-4295. You can also email firstname.lastname@example.org and we’ll do our best to answer your questions.