Benetrends Logo
Ë
By Benetrends • December 26, 2014

How To Use Your Retirement Funds (401(k), IRA) To Start A Business

Each year, thousands of Americans turn to Benetrends for assistance in taking control of their futures. Many of these new entrepreneurs have experienced down-sizing or business closures and have opted for self-reliance. Others have chosen to leave the uncertainty of corporate jobs in favor of greater personal control. Others are finally pursuing the life-long dreams of personal or financial independence.


The innovative Rainmaker Plan® from Benetrends was the first retirement and business funding plan created for small business.

In fact, our business is all about the success of yours – about using a retirement plan that allows you and your employees to save for the future and provide capital needed to start and maintain your business. Rainmaker Plans are used by entrepreneurs to start new ventures, purchase franchises or existing businesses, expand or add locations to current organizations, and to provide additional working capital for current operations. The Rainmaker Plan is a qualified retirement plan designed in accordance with the Internal Revenue Code to serve all of these purposes. It’s designed by experts who specialize solely in retirement plan design and administration. You’ll be delighted to find that your retirement plan will provide you with so much more than just funding.

Because the Rainmaker Plan allows you to invest your own funds in your own business, you’ll likely reduce or eliminate the need for debt financing. The associated reduction in principle and interest costs can greatly alleviate cash flow concerns especially in the early years of business. Use of retirement funds can help your business reach profitability faster and provide you with greater flexibility than traditional loans. As an alternative or supplement to business loans, the Rainmaker Plan establishes immediate equity in your business, making your company stronger in the process.

In addition, because you are investing your own money in your own business, there’s no need to use your home as security for a loan, or provide collateral. Plus, the Rainmaker Plan allows for quick access to funds. You can complete the process in as little as two weeks. Since  funds invested in your company through the Rainmaker Plan can be used for all types of legitimate business expenses, you can even begin paying yourself a salary from the start.

The Rainmaker Plan has considerable tax benefits. Depending upon the profitability of your business and the design of the retirement plan, a significant amount of your personal earnings can be saved in the plan on a pre-tax basis. Contributions that your business makes to the retirement plan, whether in the form of a match or discretionary profit sharing contributions, may be tax deductible by the business.

One of the most powerful benefits of your Rainmaker Plan is its ability to build wealth. When your new retirement plan is created, you’ll have the opportunity to rollover and invest your retirement funds in your own business. Other investment options include stocks, bonds, and mutual funds, allowing you to maintain a diversified portfolio. As you continue to make contributions or wage deferrals to the plan, you’ll build wealth and value in the plan, both for you and for your company’s employees, to help plan for the future.

And when it’s time to sell or transfer ownership of your business, the Rainmaker Plan can serve as an important factor in your long-term exit strategy, an issue that many new entrepreneurs don’t think about to start. Even more, your Rainmaker Plan provides you with a valuable benefit for your employees.

Retirement plan benefits are often associated with big business. Yet, with the Rainmaker Plan, you can offer retirement plan benefits to your employees right away, regardless of the size of your company. This helps you attract and retain quality employees.

The retirement planning experts at Benetrends will help you determine how to get the maximum benefit from your plan and the best way to achieve your long-term goals. Just like other qualified plans, rollovers, wage deferrals or contributions can be invested in other investment options such as stocks, bonds and mutual funds giving plan participants the ability to diversify their portfolios.

Although Benetrends does not provide investment advice, you may use your own financial advisor to determine what other types of investments to offer through your company’s new plan, or you can enlist the services of one of Benetrends’ nationally-recognized partner firms.

If at some point you find you need additional funding for the company, you have the option to re-direct some or all of the $100,000 from the original rollover into additional company stock. Benetrends will be doing more than you know to help you protect your assets and maximize your benefits. As you consider funding your business, the team at Benetrends will help you evaluate options other than the simple rollover process provided by many firms in this industry.

Depending upon your individual situation, it may be best for you to use a combination of business loans and retirement plan funds to start your business. These types of decisions have bearing on how quickly your business will arrive at break-even or profitability, or how great your debt expense will be. It’s our goal to help you use your retirement plan to succeed in business – both now and in the future.

three people (two men and a women) staring ahead and smilingFor instance, you might rollover all of your current retirement plan funds into the new retirement plan, but only use a portion of them to invest in the new company’s stock. The benefit of doing so is to provide your business a cushion for later in the event that you need additional working capital. Down the road, if your company needs a capital infusion, it may not be easy to get a business loan at that time.

If you carefully direct your funds at the time of the rollover, you can purchase additional stock later for just that type of capital infusion. Benetrends is an expert in this area. And remember, at the core of each Rainmaker Plan is an operating qualified retirement plan to be used by you and your employees to save for your retirement. It is the qualified retirement plan and the rules that govern the plan that allows the investment of rollover funds in your business.

At Benetrends, we create and manage retirement plans for companies with thousands of employees and for companies with fewer than five employees. We provide each and every one of those corporations with the same level of individualized, sophisticated plan design. While you may find that other companies sell a specific type of plan, like a 401(k) or 401(k) plus profit sharing, Benetrends doesn’t sell off-the-shelf or cookie-cutter plans.

You’ll begin our process with a comprehensive interview with a retirement plan specialist. This specialist will help design the very best retirement plan for your particular situation, which may include any combination of plan features.

Our goal is to design a plan that provides you the maximum benefits and to consult and educate you, regardless of exactly what those benefits are.

Most large businesses use a third party plan administration (TPA) services to help keep their retirement plans in compliance and to receive the maximum benefits from their plans. At Benetrends, it’s these services that set us apart. Just as with plan design, we provide ongoing support and administration to companies large and small. And you’ll receive the same level of service and expertise as our clients who have thousands of employees.

At Benetrends, we are in business to help you achieve long-term success. We also realize that a retirement plan is a complicated arrangement that needs to be built for the long-term. We’re in it with you for the long-haul. We provide proactive services such as communicating with you when your employees become eligible for plan enrollment and providing you with required materials for those employees.

We’ll also review your account statements to identify transactions that might trigger tax penalties or code violations. Additionally, we conduct yearly plan reviews using the same standards as the IRS. We find that many of our clients don’t even realize what an asset their retirement plan can be. So, we’ll provide you with proactive consultation regarding how to use your retirement plan to build wealth and minimize tax expenses in accordance with Internal Revenue Code.businessman flipping an open sign to say open

We’ll even help you design retirement plan benefits for your employees, something that’s rarely seen in small business. So you can attract and retain the very best team members for your company.

At year-end, we’ll work with you regarding strategies for how to handle corporate profits, dividend payments and bonuses to help minimize tax exposure and remain in accordance with tax code. And while you’re considering opening a business today, you might not be considering your exit from that business. The fact is, you’re eventually going to exit your business. And when that happens, your retirement plan needs to be part of your exit strategy.

Your Benetrends team of experts will work with your accountant to create a strategy to help you accomplish your desired results at the lowest possible tax cost. Following your initial rollover transaction, each and every one of these Benetrends services are included in a single low-monthly charge.

Many other firms may quote you a yearly fee, only to surprise you with additional charges for costly restatements, estimations of your company’s fair market value, plan amendments required when laws change and other government filings, to name just a few

At Benetrends, these things – and more – are all included.

All the MORE reason to choose Benetrends.

Benetrends was founded in 1983 by one of the foremost ERISA attorneys in the nation – and he’s still a full-time part of our company today. Since that time, our team has grown to include members in every facet of retirement planning. And our team members remain on-call for you , free of charge, for as long as you remain a client of Benetrends. Benetrends is the only firm that offers a written guarantee. With the Rainmaker Guarantee, we ensure that – if you meet the terms and conditions set forth in our engagement agreement – we’ll be there with you in case there is an inquiry or audit by the Internal Revenue Service or Department of Labor. If you’re working with a business broker, franchisor or franchise consultant, we’ll work right alongside you, ensuring consistent communications and timely completion of the Benetrends process. We’ll also work with your professional services providers – attorneys, accountants and tax professionals – to make sure that our process is fully understood, and meets the needs of you and your company.