Dear Sir,
What is your opinion on turning a 401K into a self-funded account and using it to fund the salon I want to open?
Thank you,
Camille
Camille, I really can’t give you an answer on this. Last year there were some companies and some articles touting that you could move your 401K to a business without paying tax or penalty. Some companies stated that for a fee they would walk you through the process. The problem is that once this is done, the company is gone and you and your representative are stuck cleaning this up if the IRS challenges the process.
In the tax professional literature there were warnings that this type of arrangement was on the IRS’s radar and that we may be seeing some activity by the IRS. As of this date I have not seen anything concrete but I would tread lightly.
Sorry I can’t give you a solid answer.
Larry Kopsa CPA
