The traditional lending market continues to provide little, if any, leniency when it comes to newbie entrepreneurs. In the past, we’ve discussed this issue and have recommended several alternative financing options to help fund new businesses. However, we’ve yet to discuss how funds in an IRA or 401K can be used as an effective way of getting started. Recently, we sat down with Jeremy Ames, the CEO and Co-founder of Guidant Financial, to discuss this attractive option.
How has Guidant helped entrepreneurs?
Since our founding in 2003, we have emerged as an innovative small business financing industry leader. Our services enable people from all walks of life to purchase alternative investments (i.e. real estate, small businesses, mortgages, tax liens, etc.) inside their retirement plans as an investment, without taking a taxable distribution. To date we’ve helped nearly 8,000 individuals utilize these funding methods to start a business or franchise, which has in turn created over 40,000 American jobs.
Why can’t business owners set up an entity themselves?
Prospective entrepreneurs should utilize our service because of the risks involved with setting up such a structure. The Guidant team has years of experience facilitating these arrangements and the legal resources to remain on top of all of the evolving policies and processes.
What makes Guidant different and better from the competition?
Since our inception in 2003, Guidant has helped nearly 8,000 individuals realize their dreams of business ownership, which is more than any other firm in our specialized industry. Guidant also offers a guarantee of their services, which is backed up by six months of complimentary recordkeeping if client satisfaction is not met.
Is your service useful for all types of business? Does industry matter?
Our service is useful for nearly all types of industries—the only types of businesses we may have challenges funding are those with possible federal legal issues, but we evaluate every prospective venture on a case-by-case basis.
How am I exempt from owing taxes even though I’m withdrawing from a retirement account?
Transferring money from retirement accounts to a new business will not incur any tax penalties because you are essentially setting up a new corporation and then purchasing stock as an investment in that new corporation via your new 401(k) plan. The Employment Retirement Income Security Act of 1974 (ERISA) made this arrangement possible and strict guidelines must be met to remain in compliance with the IRS.
Do I have to withdraw everything or can I do a partial withdrawal?
You do not have to withdraw 100% of your funds from the retirement account to use this structure. In fact, you can choose any portion of the funds to invest, and even have the flexibility of combining this option with other funding sources to make up the necessary capital to start your business.
Do you provide consultations for prospective clients?
Yes, definitely and we advocate learning about our service by having a discussion with an account manager. You can request an information packet by following this link here.
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