We’ll delve into how this funding option works, the pros and cons, eligibility criteria, and their potential impact on your startup’s financial health. Additionally, I’ll provide actionable advice on choosing this funding option for your needs and growth stage, supported by real-life examples and data.
Using 401k or IRA funds to finance a startup involves withdrawing or borrowing against your retirement savings. It’s a risky but sometimes necessary option. Call us at (877) 381-4433
How It Works
You can either withdraw funds (subject to penalties and taxes) or use a Rollover for Business Startups (ROBS) to access your retirement savings without penalties.
Pros and Cons
Pros: Access to substantial funds, no debt, potential for high returns.
Cons: High risk, potential penalties, jeopardizes retirement savings.
Eligibility Criteria
Must have a 401k or IRA with sufficient funds. For ROBS, you’ll need to set up a C corporation and follow specific IRS guidelines.
Impact on Financial Health
Provides significant capital but at the risk of your retirement security.