Where do you find the necessary funding to seed a business, buy a new one, or raise additional working capital? Traditionally, business owners have used SBA loans, personal contacts, retirement distributions, credit cards or home equity to satisfy their funding needs. The biggest downside to these sources of financing is the accrued debt and corresponding payments. They can pinch the business’s cash flow and impair the ability to access money in the event that “life happens.” This is why the idea of using retire­ment funds to inject cash into a business has been gaining popularity. Although few know about this new concept, if structured correctly it allows for an individual’s retirement account to invest directly into their business venture without taking a distribution and paying taxes or penalties.

THE BACKGROUND

The IRA and 401(k) were created in 1974 when congress passed the Employee Retirement Income Security Act (ERISA). The IRA and 401(k) trans­ferred the responsibility of retirement investing from the employer to the employee. The rules sur­rounding these plans are complex; the laws state that retirement plans are prohibited from only two types of investments: life insurance and collect­ibles.

NEW TREND IN FINANCING

Retirement Account Facilitators (RAFs), such as Bellevue, WA-based Guidant Financial Group, Inc. help structure specific retirement accounts that en­able investment into private businesses.

“This investment strategy has been implemented for [more than] 15 years and has been legal since ERISA passed in 1974,” said Joe Wishcamper, gen­eral counsel for Guidant Financial Group.

This industry, bolstered by the stock market perfor­mance of recent years, has been growing at a rapid pace as more entrepreneurs pursue owing or financ­ing their business this way. Wishcamper said that “last year [Guidant] structured retirement accounts for about 800 clients. This year [Guidant] will structure retirement accounts for more than 1500.”

The main reasons a business owner would want to turn to their retirement accounts for financing in­clude the added advantages of less business debt and greater long-term potential for their retirement funds. By using retirement money instead of a tra­ditional business or home-equity loan, business owners can avoid costly debt service.

This enables more money to be reinvested into the business instead of sending cash to a bank each month in the form of interest payments. In addition, because the retirement account owns a portion of the business, some of the profits from the business can be returned to the retirement account tax-de­ferred.

If you are looking for financing for your new or current business venture, your retirement account just might be the answer. Before proceeding with this type of investment strategy it is important to understand all the benefits and risks involved when investing retirement dollars into your business or franchise.

More information about financing a business or franchise with existing retirement accounts and Guidant Financial Group can be found at www.guidantfinancial.com or by calling 888.472.4455.

Retiring soon? You need a self managed IRA. Self managed IRAs, or what can be sometimes be called self directed IRAS, are by far the best management vehicle for soon to be retirees, or for that matter anyone who plans to retire in the future, and that’s all of us.Retiring in the future is going to be a problem for those who want to retire comfortably. As the population ages and the tax base shrinks relative to those needing retirement pensions, pressure on government funds for retirees is going to grow. Those smart enough to recognize the problem need to act now, and a self directed IRA, preferably invested in real estate, is the best way to do it.How serious is the problem for future retirees? A recent Social Security Administrations trustee report has found that by 2040 social security will not be able to meet full retirement benefits. Scary isn’t it?An IRA, or an Individual Retirement Account, is a vehicle to direct money into a fund that is set up to provide for your retirement. And anyone serious about their retirement needs to plan and invest wisely for it, right now.Why would you do that through a self managed IRA? Why not just save up for your retirement?The answer is all to do with tax. The government has graciously allowed us all substantial tax benefits for planning for our retirement through an Individual Retirement Account. Why would the government give you tax benefits for planning for your retirement? To encourage people to self fund their own retirement to take pressure off limited future public funds. I won’t go into all the tax benefits that attach to IRAs, except to say that if you’re serious about a comfortable retirement you simply must have your own IRA to help you plan and invest for your retirement. For more details on the tax advantages talk to your financial advisor.Of course many people already have their own Individual Retirement Account. Problem is that these are set up through the banks and trustees and investment companies, which of course direct your IRA retirement funds into their own products. And the investment returns on these products are not spectacular. You won’t set yourself up with a comfortable pension on 6% or 8% return on investment.Most IRA custodians only allow investments in a narrow range of investment vehicles like stocks, mutual funds, bonds and CDs.However those in the know recognize that a self managed IRA is a far better vehicle to maximize returns on your retirement funds. If you rollover your current IRA into a self directed IRA you have full control over how, and where, your future retirement funds are invested, and far more potential to maximize your investment returns. And so to maximise your comfort level in retirement.A self directed IRA custodian will allow you a much wider range of investments, and these include real estate.Why would you want to invest your IRA into real estate, particularly in 2008 when the real estate market is in meltdown? Firstly because real estate is always the best long term wealth creation tool, especially when it’s tax advantaged. It’s solid and less volatile than any other investment, and so allows you to borrow safely. Mortgages over real estate are much easier to obtain than, say, a loan to buy shares. Even in 2008.And what about the current state of the property market? Why would anyone with a self managed IRA want to invest in real estate right now?Because, like in any market, there are always fantastic opportunities available if you know where to look and how to invest. Not all real estate is a disaster, and there are some very good advizors with spectacular real estate investment opportunities available, even now.One in particular offering no money down real estate investing opportunities to ordinary IRA and 401(k) investors (and ordinary credit investors) right now. Guaranteed returns and immediate equity, and backed by a solid investment strategy backed by a US public company with an impeccable record in real estate investing.So if you’ve been thinking about your retirement, either in the short term or the long term, and either have your own IRA or need to set one up, do it. Set up your own self managed IRA or rollover into one, and get started planning and investing for your retirement, no money down, guaranteed.You’ll be comfortable in your retirement if you do.