If you’re looking at innovative ways to purchase a business, we can help. Whether you’re considering buying an existing AlphaGraphics Business Center, converting an independent business to AlphaGraphics or building a new Center, you could take advantage of qualifying 401(k)/IRA retirement funds to help finance your purchase.
The process – called ROBS (Rollover as Business Start Up) – allows a business owner to invest in themselves and their businesses by essentially “rolling over” their existing 401(k)/IRA retirement funds into a new retirement plan that invests in their new C Corporation.
“Many of our Franchisees, both new and existing, have put their retirement funds to work through ROBS, and it can be a very attractive approach from a tax and accounting standpoint,” says AlphaGraphics Chief Development Officer Dave Buzza. “We want to ensure that members of our Network understand and have access to every funding option available.”
Take a minute to explore some of the top benefits of a ROBS funding plan in this blog from Tenet Financial Group, one of our preferred funding partners. Following are a few key benefits of this tax-deferred and penalty-free funding option:
ROBS funding is not a distribution.
Taking existing retirement funds and moving them to another investment – even your brand new C Corporation’s retirement plan – is not considered a taxable distribution by the IRS, thus you aren’t penalized come tax time for taking a premature distribution.
ROBS helps you start your business with improved cash flow and business equity.
ROBS/401(k) rollover funding is not considered debt the minute you open the doors for business. Less debt means more money for operational expenses such as inventory and salaries, not to mention more initial business equity… and less debt is always the best-possible position for a business owner.
ROBS funding can be used with other loan types.
ROBS funding is often used in tandem with other loan types, including SBA loans. ROBS/401(k) is not a mutually exclusive funding option, so it plays well with others.
ROBS funding frees up time for the business owner.
You won’t have to spend time worrying about making payments, keeping an eye on interest rates or worrying about financing, once your C Corporation is set up. The administrator of your new C Corporation’s plan will handle the management details and eliminate that time suck from your day.
ROBS funding takes full advantage of provisions of the Tax Cuts and Jobs Act.
Corporations funded by ROBS rollovers plans get to take full advantage of the newly reduced tax rate for corporations as part of the Trump Administration’s Tax Cuts and Jobs Act. The permanent business income tax reduction from 35 percent to 21 percent couldn’t be better news for American businesses.
AlphaGraphics can help you evaluate all of your funding options. If you’d like to talk in more detail about these or other decision points, please get in touch by sending us a note here.