Downsides to Borrowing From Your 401(k) to Fund Your Business
Using 401(k) funds to buy a business is a viable but high-stakes financing strategy. The most common and complex method is a , which allows you to access retirement funds without early withdrawal penalties or immediate taxes. Alternatively, you may consider a 401(k) loan for smaller amounts or a direct distribution if you are willing to pay the associated taxes. 1. Rollover for Business Startups (ROBS)
ROBS is the only legal way to use retirement funds to invest in a business you control (owning more than 50%) without triggering taxes or penalties.
