The BizBuySell Small Business Community

  • Get Expert Advice

  •  • Find Local Service Professionals

  •  • Share Your Experiences

how i can use my 401 k for open a business and not to pay tax or penalty. Thanks Sara

I am looking to buy Pre school in orange county ,

No User Photo

Answer This Question

max 5000 characters

Web Reference (optional)

e.g., ""

Review Community Guidelines

Help keep our Community clean and on topic. The BizBuySell Community is a place where you can discuss your questions, concerns and knowledge with others you can trust. It is not OK to use this forum to solicit others for personal or financial gain, or to rant about personal issues. It's all in the guidelines.

Submit Your Answer
Answers (4)
Gail Perry Grinkevich
The Investor Commercial Real Estate Serv
Sussex County, NJ

Sara: It is possible to use retirement funds and have them switched over to a self directed IRA which you can then use as a down payment for the purchase of the child care center or other type of business that you want to purchase. I have been successful in assisting one of my clients accomplish this exact thing in purchasing a child care center in NJ. It is somewhat complicated and you have to have a third party who specializes in this who can handle this for you. You want to make sure you have someone who fully understands the proper way to accomplish this to avoid having to pay any taxes or penalties. Done correctly it is a powerful source for the funds needed to finance a down payment for a business purchase. You can also when you decide to sell the business, roll the funds & profits back out of the business. My client made a great profit on his first child care center and now has even more money to invest, and he is planning to do this again.

Contact me directly and I will be happy to explain what we did and put you in touch with the right people to get the job done for you.

Jun 18, 2009
Douglas Batts
Murphy Business & Financial Corporation
Collin County, TX
Premium Broker

Sara, as has been discussed, there are several qualified sources who can help you transfer assets from your 401K to buy a small business without income tax penalties or consequences. We partner with Guidant Financial. If you are interested in getting more information on them, feel free to contact me directly.

Jun 18, 2009
No User Photo
Tarrant County, TX

Hi Sara--

We are a company that can asssit you through this process as well as other potential funding solutions (SBA lending, leasing, credit lines). If you would like more information please visit our website at and fill out our short form questionnaire. We will get right back to you.

Jun 18, 2009
Carl Pallini
Tri State Franchise Authority
Pike County, PA
Premium Broker

Hello sarah,

there are specific companies that specialize in assisting buyers in how to utilize their 401K funds in a tax free manner for business acquisitions only.It must be done very specifically and properly so as not to trigger a tax event-but it can definitely be done.

Jun 9, 2009

Start a Discussion