Frequently Asked Questions
- 401K from a previous employer
- Traditional IRA
- 457 or 403B from a previous employer
- Thrift Savings Plan (TSP)
If you choose, you can use multiple retirements if necessary.
What’s NOT eligible is using a ROTH IRA, ROTH 401K, and Inherited IRA.
Yes, you can use more than one or more qualified retirement plans to fund your business. Multiple partners can invest in the business using retirement assets.
There are four steps to funding your business checking account
1. We create a C-Corporation
2. Open up a new company (Self-Directed) 401K at a brokerage firm
3. Rollover retirement from a current qualified retirement plan into the new company 401K
4. 401K Plan buys stock in C-Corporation. Transfer an even amount of money from company 401K into your business checking account
The answer is found in the law. Section 408(e) of ERISA allows for investment in “qualified employer securities.” Congress defined “securities” as stock in a corporation. Only two types of for-profit corporations exist, an S-Corp and a C-Corp. In order to retain its flow-through provisions, an S-Corp can only be owned by an individual or a qualified subchapter S trust, it cannot own stock in an S-Corp. The C-Corp is the only entity that allows for “common stock” purchases.
Yes, you can pay yourself a “reasonable” salary as soon as you capitalize your business. We suggest you consult with your CPA regarding salary and payroll. When taking a salary, you will be required to contribute a minimum of 1% of your pay check to meet the “permanency” requirement by the IRS.
When finding a CPA, it’s recommended to find a CPA that is C-Corp friendly. A CPA that is knowledgeable on C-Corporation tax laws. If you need a CPA, we can recommend a nationwide CPA firm that specializes in small business, franchise opportunities.
Specialized Accounting Services
Attn: Jack Ruskin,
TF: 888.600.0075, ext. 106
We are not as sales company. Our mission at Phoenix Funding Source is to help you identify and explore your funding options so you become comfortable when making a decision. We know your goal is to be a business owner and in order for you to feel comfortable in making your final decision, you need to feel comfortable with your funding option(s). We provide a very high level of customer service to ensure that the design, installation and administration of your new 401K plan is done correctly. For most of our clients, this process is largely unfamiliar. Because of that, we view our professional responsibility to our clients as one of our highest priorities.