There are a plethora of rules separating future retirees from the funds held in trust today and awaiting them at retirement. Distributions are taxed as ordinary income—upwards of 50%. Early distributions, prior to age 59 ½, add a 10% penalty tax. The Employee Retirement Income Security Act of 1972 (ERISA) has an ironclad “anti-alienation clause,” this means that the future pension may not be used as collateral for a loan. If it is deemed to be a distribution, therefore taxed. There is an exception for “participant loans,” but these are limited to the lesser of 50% of the vested account balance of $50,000 and must be amortized over five years or less with quarterly interest and annual principal payments. Loans may not be rolled into or allowed in an IRA account.

Gateway School Sales has formed a strategic alliance with companies that have developed a way to legally move money locked in 401(k) or other IRA rollover accounts directly into a new or established business without distributions, taxes, penalties or the use of loans. The money may be used for business acquisitions, franchises, property, equipment or working capital.

If you have funds that are locked in a retirement fund, you can access those funds to help you realize your dream of buying a business through our relationship with these companies. Please ask a broker for more information on this process.

Call Gateway School Sales at 972-267-9003 for more information.