FAQ's
Frequently Asked Questions

401K from a previous employer
Traditional IRA
457 or 403B from a previous employer
Thrift Savings Plan (TSP)
SEP-IRA
Pension
Annuities

If you choose, you can use multiple retirements if necessary.

What’s NOT eligible is using a ROTH IRA, ROTH 401K, and Inherited IRA.

+ Can I use multiple retirement plans to fund my business?

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.

+ What are the steps to funding?

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

+ Why a C-Corporation?

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.

+ How long does the funding process normally take?

The average length of time to fund the corporation bank account is 4-5 weeks. Ask us about the “Safety Net” program when using a Traditional IRA, where the funding process can take place in 5-7 business days

+ Can I take a paycheck?

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.

+ How much does it cost?

The fee to set up your Corporation, design and install the plan is a one time, upfront fee of $4,995. The one-time fee of $4,995 is also considered an investment toward your personal stock ownership into your company. You pay the $4,995 fee directly to us via a credit card payment, we “indirectly” give it back to you as an investment of personal stock ownership into your company. A Third Party Administration fee of $120/month will be billed, beginning the month after the effective date of your plan.

+ Can I pay the upfront fee from my retirement?

Per the 2008 IRS memorandum, the Promoter Fee (upfront fee) cannot be paid using retirement dollars. It must be paid from personal money.

+ What kind of support do I receive in the event that my 401K Plan is audited?

The IRS has a formal review process that they implemented after issuing their operational guidelines in October, 2008. Your Third Party Administrator will maintain all of your 401K Plan records. If you were to receive a Letter of Inquiry from the IRS, your Third Party Administrator would assist you in accurately answering all of the questions on your behalf. Since the IRS implemented their review process, your Third Party Administrator has never had a plan inquiry escalate into a full plan audit. However, if your plan was audited, your Third Party Administrator would assist you until the audit is completed.

+ No tax or penalty from the IRS?

When using retirement funds to invest in your business, you are rolling over funds from a current “qualified” retirement plan (401K from a previous employer or an IRA, cannot be a ROTH IRA or an inherited IRA) into another “qualified” retirement plan. YOUR company sponsored 401K , consequently, NO personal distribution is occurring.

+ Why should I consult with my CPA?

Your tax advisor is an integral part to this process. To insure that your opening balance sheet is correct and the ongoing administrative responsibilities are met, we recommend that you meet with your tax advisor.

+ What if I don’t have a CPA?

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

D: 262.891.3647.

E-mail: jack.ruskin@sas-cpas.com

Website: https://sas-cpas.com

+ Why should I use Phoenix Funding Source?

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.

FAQ'sFrequently Asked Questions

FAQ's
Frequently Asked Questions