Using IRA and 401k money to start business..

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Mechanga

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any of you consider using your IRA and 401k moeny to help start a new venture/business??

Just read an article about a guy who did that and is cashing it in bigtime now!
 
i am considering something like that.. can you please post the link to that article. Thanks!
 
try,

don't have a link but it was in the August Issue of Bloomberg Markets Magazine. The guy who did it was is John Plaza and he started Seattle Biodiesel.
 
Having never read the article, I personally wouldn't do that nor would I advise it. Sure, it works beautifully for some people, but do you hear about the utter disasters? Starting any business is risky with a low probability of success no matter how you fund it. If it was really a good business idea, I'm sure you can get a bank or family/friends to help you out.
 
search "john plaza bloomberg markets" at google, the article comes up near the top of the results.
 
If your new venture takes off. Howver, liquidating your 401k and IRA can be costly both from a tax stand point and a compounding standpoint for your retirement.

Some companies offer the ability to borrow from your 401k and that may be an option for you. However, unless your 401k/IRA values are huge I would suggest trying to get a loan before venturing down that path.
 
I would suggest not, unless its an existing business and you are close to making it work and this is your last alternative. The risks are too great for a start-up. If you read any of the Finance pubs you will find articles on innovative ways people finance their businesses. Without reading this article, I'd imagine the company would have been succesful whatever his method for obtaining the seed capital were. If you're under 59 1/2 and moderately succesful you will net little more than .50-.55 cents on the dollar from a 401-K, extremely expensive (and the tax bill comes very quickly)! Use other financing, if the business doesn't work than you could tap in to your 401 K if necessary (i.e. to pay off the loans and keep your house etc).
 
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