Charlotte, NC · Member since 2016 · 56 posts · 8 votes
as I look into starting my C corp I have some questions. When I roll over my 401 K into C Corp do I have the cash to build my business or does it act as a loan to pay back my retirement fund?
(1) Borrow from your existing 401K (loan) and invest in anything (including C Corp stock) and pay back the loan as per its terms --- not always recommended
(2) Start a legitimate business (generally as a C-Corp), start a 401K plan for the business, rollover existing 401K, have a 401K buy the private shares of this business (401K plan become a shareholder of the business). All dividends are appropriately distributed to the shareholders (including the 401K). This is ROBS.
Please work with a very knowledgeable and qualified group of professionals on ROBS, as it requires the following:
(1) ERISA attorney to appropriately draw-up the C-Corp (assuming that is what is the best choice) documents so as to enable 401K shareholders
(2) Plan provider who allows the holding of C-Corp shares in plan
(3) Third-Party qualified appraiser, who can appraise the C-Corp shares on an annual basis
There is also clear requirements for making sure that the transactions within the C-Corp does not created prohibited transaction for the plan participants (such as loan guarantees, etc.)
Charlotte, NC · Member since 2016 · 56 posts · 8 votes
9y
@Jeremy C. It's going well. I've decided to start another business entity LLC to do passive income rental properties and keep the C-Corp as an active business flipping houses. Tax for LLC will be S-corp. Hope this helps. PM me if you have further questions.