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In its' simplest form, the funding process is pretty straightforward. Funds you've already invested in your 401K or IRA with your current custodian (Schwab, Fidelity, etc) are re-invested into a new trust account using another new corporation - both of which you control. The new corporation then purchases stock in your new business, which in turn provides funding for your new business.

By transferring funds from your current custodian to your new corporation's trust account, you are simply switching investments from mutual funds to what the IRS terms as "e;qualifying employer securities"e; and avoiding any penalties for early withdrawl or distribution as well as the associated tax liabilities.

The process can be broken down, again in its' simplest form, to these five basic steps:

1. A new, closely-held business corporation is created on your behalf.
2. The new corporation creates a tax-deferred trust and replacement plan.
3. Funds are transferred from your existing custodian into your new trust plan bank account.
4. The trust buys stock in your business.
5. The business now has cash on hand without incurring any debt.

In addition to exercising complete control over the newly formed corporation and trust plan, you decide how much to transfer to your new corporation's trust plan and how much stock to purchase in your business.

This unique approach to small business funding unlocks the funds you currently have, which are in your 401K or IRA, and gives you full access to, and full control of, those funds for help financing your business.

The amount of funds available to fund your business by taking early distribution (chart on the left) or by creating a pension transfer trust (chart on the right) are substantial. The charts below illustrate the difference between the two methods based on $100,000 initial amount. On an initial $100,000 you can save over $30,000 with a Pension Transfer Trust! That's an additional $30,000 to help fund your business and not lost to taxes or penalty fees.

Taking Early Distribution		Pension Fund Trust Transfer
(Based on $100,000 Withdrawl)		(Based on $100,000 Withdrawl)

As illustrated above, most of the liabilities associated with using the traditional early distribution method are percentage (tax) based and will vary according to the initial amount withdrawn. The costs associated with a Pension Transfer Trust, however, are primarily service fees for the initial setup and ensuring legal compliance and do not scale dramatically in accordance with the initial investment amount.

Finally, you may qualify for additional Federal tax credits under The Economic Growth & Tax Reconciliation Act of 2001. These credits, combined with standard income tax deductions for consulting fees, can easily reduce your after-tax cost by an additional $3,000 or more.

The passage of the Employee Retirement Income Security Act (ERISA) in 1974 and Economic Growth and Tax Relief Reconciliation Act (EGTRRA) in 2001 made it possible for taxpayers to use existing 401K and IRA funds to fuel their own businesses. Both ERISA and EGTRRA have their own basic rules, guidelines, and specific requirements to ensure compliance.

In the past, due to the complexity of IRS, ERISA, EGTRRA, and Department of labor code sections and rulings, this method required the assistance of both tax and pension attorneys. The resulting costs were often extremely high, almost negating the benefit of using the ne funding method. Today, there are many specialists in this specific, focused field who can assist you through the entire process and still ensure full compliance with all tax codes and regulations at a fraction of the cost.

The statutes and codes are all publicly available for anyone to move forward with the process on their own as well, however given the complexity and risks associated if it is done incorrectly, it is strongly recommended a specialist setup the process for you.

Given the complexities involved in the initial setup of this funding method, it is highly recommended you seek the services of a professional for the initial setup and structuring. The statutes and codes are all publicly available for anyone to move forward with the process on their own as well, however given the complexity and risks associated if it is done incorrectly, it is strongly recommended a specialist setup the process for you.

If you would like a qualified, professional specialist to contact you - there's no cost or obligation for an initial consultation - please complete the form on the right.

To learn more about ERISA, EGTTRA, and the process we invite you to explore the following online resources:

• Employee Retirement Income Security Act (ERISA)
• Economic Growth and Tax Relief Reconciliation Act (EGTRRA)

If you'd like to receive additional, free information about how you can fund your own business using a self-directed pension trust please complete the form on the right.

A qualified expert, with the necessary skills to assist you, will be in contact with you shortly.