IRA/401(k) Rollover

Retirement Funding

401(k) ROLLOVERS AS BUSINESS START UPS (ROBS)

Today many people are choosing to preserve their cash and obtain funding in other ways. One popular funding option is to access traditional IRAs or 401(k) funds (from a prior employer). If you have retirement funds and you have not yet paid taxes on those funds, you can use them towards the investment of a business. This can be for both new as well as for an existing business (for recapitalization). You are in control and you determine how much of your funds you would like to invest in your franchise or business.

The benefits of 401(k) funding are numerous and easy-to-understand, including:

  • *Tax-deferred and penalty-free
  • *Not a traditional loan – does not have a required payback schedule
  • *Start your business with more equity from day one
  • *Funds can be used for operational expenses such as inventory, equipment and salaries

Fund My Franchise is Powered by Tenet Financial Group, an industry-leading third-party administrator (TPA) that specializes in small business funding and has nearly 80 decades of combined funding experience.

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Why Tenet Financial Group?

In March 2003, Derrick Skogsberg, founder of Tenet Financial Group, used retirement money and the first 401(k) Plan he ever created was his own. The same plan you would have is the same plan that Derrick has today. He has “been there, done that.”

With the combined expertise of Fund My Franchise and Tenet Financial Group, you have the strongest team behind you and your business right from the start. We believe in QUALITY of plans versus QUANTITY of plans. You are a person…not a number.

Service After Funding: When I was young, my father told me to associate myself with like-minded people who have the same business values, morals and ethics that I do. When you experience Tenet Financial Group like I have and my clients have, you will witness Sincerity, Honesty, Integrity and Efficiency, and you will know that you have a strong business partner at your side for the long-term.

Questions & Answers:

Q. My CPA/Attorney isn’t familiar with this. Is it legal? How long have people been doing this?

A. The governing body of law that allows a 401(k) Plan to purchase stock in the plan sponsor was passed in 1974. Although retirement plans like this are prevalent with big corporations, their use in small corporations is relatively new. For that reason, your CPA or Attorney may not be aware of it.

Q. How much does it cost?

A. Fund My Franchise charges $4,995 to design and install the 401(k) Profit Sharing Plan. The 3rd Party Administrator (Tenet Financial Group's) annual Administration Fee is billed monthly at $135, starting the month after the effective date of the plan.

Q. How long does this process take?

A. The average length of time to fund the corporation is 3 to 4 weeks.

Q. Can I take a paycheck?

A. Yes, you can pay yourself a salary as soon as you capitalize your business (typically 4 to 5 weeks). We suggest that you consult with your tax advisor regarding salary and payroll.

Q. Why a C-Corporation?

A. A retirement plan is allowed to purchase stock of the plan sponsor, so long as the plan sponsor is a “separate taxpaying entity.” The only corporate entity that is considered a “separate taxpaying entity” is a C-Corporation.

Q. What kind of support does Tenet Financial Group provide if audited?

A. The IRS has a formal review process that they implemented after issuing their operational guidelines in October, 2008. As your Third Party Administrator, Tenet Financial Group will maintain all of your 401(k) Plan records. If you were to receive an IRS Inquiry letter, Tenet Financial Group would assist you in accurately answering all of the questions. Since the IRS implemented their review process, Tenet Financial Group has never had a plan inquiry escalate into a full plan audit. However, if your plan was audited, Tenet Financial Group would assist you until the audit is completed.

Q. Why should I consult with my CPA prior to starting the process with Fund My Franchise?

A. Your tax advisor is an integral part to this process. To insure that your opening balance sheet is correct and the ongoing administrative responsibilities are met, we recommend that you meet with your tax advisor.

Q. What makes Fund My Franchise different?

A. We are not a sales company. Our mission at Fund My Franchise is to help you explore your funding options so you become comfortable when making a decision. We know your goal is to be a business owner and in order for you to feel comfortable in making your final decision, you have to feel comfortable with your funding option(s). We provide a very high level of customer service to ensure that the design, installation and administration of your new 401(k) plan is done correctly. For most of our clients, this process is largely unfamiliar. Because of that, we view our professional responsibility to our clients as one of our highest priorities.

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