401k Business Funding Structure

QUESTION: I have a former employer 401k and old IRA that I would like to use to for the 401k business funding structure. Can I rollover my 401k and IRA to a stocks bonus plan and then use the stock bonus plan for the 401k business funding structure?

ANSWER: No. Because the 401k business funding structure, referred to as rollover as business startup by the IRS, only works in conjunction with a 401(k) profit sharing plan. Note that while both a stock bonus plan and a 401k profit sharing plan fall under the defined contribution category of retirement plans, a stock bonus plan allows the employer to make contributions in the form of employer stock. This is quite different from the 401k business funding structure or rollover as business startup (ROBS) arrangement whereby the 401k uses funds rolled over from a former employer 401k or from an IRA (or other approved retirement funds) to buy newly issued C-corporation shares, not for contributing existing employer stock.

To learn more about funding your business with your 401k, IRA or other retirement funds, please visit MySolo401k.net or call 1-800-489-7571.