The article is a trend piece on franchisees using their 401(k) to purchase their business. John Heifner, Workout Anytime franchisee, gives great insight into how he went about purchasing his Workout Anytime with the use of his 401(k). He went on to say “Starting our third year, I can start thinking about funding a retirement again instead of keeping my money more fluid for cash flow.”
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Done right, a rollover of retirement funds can be smart option
By: Jeffrey McKinney
More franchisees are using their 401(k) retirement funds to finance the purchase of a franchise. Who should consider the move? Experts explain the do’s and don’ts, including warnings about strict IRS rules.
Jeremy Turner’s decision to pretty much tap out his retirement funds to buy a Lawn Doctor franchise was very clear: He calls it the best option he had after banks would not lend him the money.
Turner withdrew $70,000 from his 401(k) plan and another $30,000 he and his wife had in savings to start the lawn care business in St. Louis in 2010. Turner says he discovered companies charge around $5,000 to help complete the financing process. “I would not suggest that someone try to do this on their own because of tax and other risks involved,” he says.