Entrepreneurs looking to leverage existing 401(k) assets to start their business have long trusted the Benetrends Financial’s Rainmaker Plan® to realize business ownership.
With those assets available, business owners have more flexibility in how to start and grow their companies.
As seen in the recent article, So You Want to Use Your 401(k) to Start a Business, Benetrends has been helping business owners realize their dreams through the creative and innovative use of retirement funds for over 35 years. Here are three innovative ways to use the Rainmaker Plan to grow your business.
1. Reduce the Need for Private or Government Loans
Under the Rainmaker Plan, you establish your new business as a C corporation and establish a retirement plan in the new entity. You then use existing 401(k) or IRA funds to fund that new plan, which purchases stock in your company. That cash can then be used for all kinds of needs related to starting or growing your company.
By using retirement funds and the Rainmaker Plan, you can reduce or, in some cases, eliminate the need to borrow from banks or Small Business Administration (SBA) programs to fuel your business. You will experience reduced or no monthly interest charges and loan paybacks.
2. Invest In Yourself and Your Company
You can roll over funds in addition to those needed to start the company. For example, say you roll over $250,000 in retirement funds to the new retirement plan but only need $150,000 in stock purchases for the company.
The remaining $100,000 can be used to invest in your new retirement plan as you see fit. Those investments can be used for your retirement, for personal expenses, or to reinvest into your company.
3. The ROBS+™®
Benetrends is once again innovating the use of retirement funds for small businesses. The ROBS+™ is designed to provide business owners with a way to build wealth and allow for an exit strategy that lets them sell their company at a profit with little to no tax consequences. It is designed for entrepreneurs looking to accomplish three goals:
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- Buy or start a business
- Build wealth
- Mitigate tax burden
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Here is how it works. Benetrends sets up a new retirement plan, modeled after the Rainmaker Plan. A small portion of the total investment goes into this newly formed plan. The remaining funds go into the corporation.
Next, two types of stock are issued. The funds in the retirement plan are assigned Common Stock shares, whereas the personal investment become Preferred Stock shares. If needed and if you qualify, you can now obtain additional funding through an SBA loan.
After the stock has been issued, you now have the capital to start. purchase or recapitalize your new business or franchise.
The ROBS+™ is the latest in innovative strategies from Benetrends to help entrepreneurs achieve their financial goals. To learn more, schedule a consultation today.