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View Full Version : Can 403(b) funds be useded towards the purchase of an existing business?



Gipper
01-04-2011, 04:05 PM
I am looking at buying the business that I have been managing the last couple of years. My father is looking at possibly helping with the purchase and we were wondering if a portion of his 403(b) plan can be used to help purchase the business. We are not sure if we will partner or if he will just help fund the purchase. Any help is appreciated.

Gipper

Evan
01-04-2011, 09:13 PM
Is he looking to hold an equity interest in the new venture, or is this supposed to be merely a loan?

I'd never recommend that an individual use their retirement funds on their own business venture, it's simply too risky.

jamesray50
01-04-2011, 09:24 PM
Does his plan even allow him to take a loan? If it does, there is probably a limit as to how much he could borrow. He should look at his plan document and then look under IRS regulations for 403(B) plans.

phanio
01-11-2011, 10:47 AM
Most self-directed retirement plans can be used to finance a business purchase - they essentially invest in the business - just like they would invest in any other company. Know that there could be loses and huge fees.

However, do to the nature of a 403(b) - I don't think these can be used for a business purchase - a house purchase yes. Need to talk to your 403(b) administrator as to their requirements.

phanio
01-25-2011, 08:23 AM
I was wrong - 403(b)s can be used to purchase a business, a franchise or even to recapitalize a business. Nearly any retirement accounts can be used as long as it can be rolled over into a self-directed account.