By Franchesco Fickey Martinez • 24 Oct, 2023
Imagine this! You have had a successful career, every year you contributed to a retirement account, and throughout your life, you aim for retirement. However, there’s usually one item in your bucket list that you always wanted to do. It is that one thing that brings you so much joy, you do not see it as a job, rather it is a passion. You are financially stable, debt has been absent from your lifestyle for sometime, but you really want to start a personal business. A roll over business start up, utilizes a qualified retirement account or solo 401(k), to use the assets of that account to start up a business 100% owned by the retiree. This C corporation has a very special format, is very detail oriented, and usually needs the assistance of an attorney and tax preparer. There is one additional reoccurring factory: unfortunately, the business could not receive normal funding or lines of credit. Thus, an alternative is needed. The qualified retirement account would be converted into a new format of a retirement account that owns stock in a personal start up business. The business requires the retiree to work for the corporation, taxes may be double, but the retiree takes home a salary from the business, and the retirement account may profit, if the business profits. This special retirement conversion would not be considered a withdrawal, and would not need to be taxed as such. It is a way to receive funding for a business a retiree strongly desires, but alternative methods of funding were not available. So, what kind of businesses are possible? The sky's the limit. What ever you are passionate about, as long as you have a business plan, proper set up, and proper monitoring, a lifelong dream can come to life. What are examples of some lifelong dreams: A Farm or Plant Nursery. You love the outdoors and nature, and after a long time working indoors, you want to be your own boss outside of a cubicle, small office, and fluorescent light bulbs. A farm needs land, livestock are expensive, and marketing, branding, and distribution is vital. Similarly, a plant nursery may need land, hoop houses, and greenhouses. The plants may be propagated, planted by seed, or starts were purchased from another nursery to be nurtured by your business. A food truck. Do you love cooking? Do you love festivals? Is there one item that you feel like you are the best at making? It could be tacos, it could be sandwiches, it could be coffee or desserts, it could be donuts or churros. A food truck may be a lucrative business that returns the initial investment, and provides a profit, as well as the start to a passionate endeavor. Fishing boat. You may love being out on the water, seeing the sun rise, the smell of the ocean breeze, working with your hands. Collecting crab pots, collecting shrimp parts, collecting gnats, casting a fishing line, chartering a boat out into deeper waters. a fishing boat can be a pricey investment, but if you are passionate about the sea, you may do what you love, build up a nice tan, and sell the bounty of the sea. Massage therapy. If you are licensed as a therapist, the essential oils, the calming music, and the therapeutic effects that you help create, might be a profitable passion. The business may have a brick and mortar location that is being rented or owned, you may need a website or advertising, or marketing, you may need specialty tables, towel, warming devices, and other industry tools. You may build up a clientele, while working on your schedule, and ideally turning a profit that pays you for your time and returns the investment back to the retirement account. Again, the sky's the limit for the start of business that you are able to pursue. Again, if funding can be accomplished through more common means, then that should be pursued. ROBS can be more expensive, but it is an option when other sources of income are not available. Disclaimer: This Blog is made available by the lawyer or law firm publisher for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney-client relationship between you and the Blog/Web Site publisher. The Blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.
