Using 401k or IRA money to fund a startup?


Is there a way to use my own money in a 401k or IRA account to invest in my startup? It looks like "Rollover Business Startups" (ROBS) are discouraged by the IRS. Are you aware of any other tactics to use 401k or IRA money?


asked Oct 25 '09 at 01:09
Stapler Scissor
96 points
Get up to $750K in working capital to finance your business: Clarify Capital Business Loans

3 Answers


This is an instance of the class of questions that go like this: Should I borrow money to start a business?

The thing is, in many cases, you will end up dipping into your savings if your business hits hard times. Starting your business by depleting those savings is a very risky idea.

Only you know what your risk tolerance is, and how much of a safety net is available to you.

Good luck.


answered Oct 25 '09 at 08:16
784 points
  • +1 for "This is an instance of the class of questions that..." -- spoken like a true programmer :-) – Alex Papadimoulis 14 years ago


Speak with an accountant (make it a priority to find a good one if you are planning on starting a business). My limited understanding is that if your 401k plan permits it, you can borrow the money from the plan. Usually you can borrow up to $50,000 or 50% of your 401(k) balance (whichever is smaller). You do have to pay that money back to yourself with interest or face penalties.

answered Oct 25 '09 at 06:00
Oleg Barshay
2,091 points
  • And if you quit that job or get fired, you have to pay it all back or it's an early withdrawal. That's a lot of risk! – Coder Dennis 14 years ago


Sorry, I'm not aware of any such tactics. But, just because you could (perhaps) borrow money from your retirement accounts doesn't mean that you should. I would think very carefully before doing that, if it were possible.

Forgive me for using the "F" word, but in case your business FAILS, wouldn't you want your retirement savings to still be there? If business failure can take all of your savings with it, you're going to leave yourself with a lot of catching up to do!

Personally, I'd rather start a business knowing I have some kind of personal savings safety net as opposed to forcing on myself a succeed-or-die-trying scenario. For some people, desperation may encourage success -- but, IMHO, I find I can function more strategically in business when my personal finances are in order.

answered Oct 26 '09 at 04:14
Chris W. Rea
688 points

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