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12 Jan 2017
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How a BORSA Plan Help When You've Been Downsized

It's all too common to see articles like this one in the Houston Business Journal: "MD Anderson to Cut 1,000 Jobs in Houston" The price of oil still remains low and there is a lot of uncertainty about the new administration both of which can drive layoffs in our area.

 

Facing downsizing or the fear of being let go is not a good place to be – regardless of your age. In the case this happens to you, how will you be able to replace the income your family depends upon? At DRDA CPA’s & Business Consultants, we are able to help you understand how to utilize your retirement funds to create income.

 

Our Firm, DRDA CPAs & Business Consultants provides a Business Owner's Retirement Savings Account (BORSA) Plan. This structure allows individuals to access retirement funds tax and penalty free if they are using it to buy or start a business.

 

A BORSA Plan works like this:

1) DRDA establishes a C Corp - the operating business

2)DRDA establishes a 401k Profit Sharing Plan for the Corp - the plan

3) Client rolls in 401k/IRA or other qualified funds into the new 401k plan via a qualified rollover WITHOUT tax or penalty.

4) Client makes an investment decision - thru their 401k they are going to buy stock, not in IBM or Apple Computers but in their own C Corp. The funds are now in the corporate checking account and available for any purpose - to include leveraging against a loan if that is part of the deal requirement.

 

How does this information help someone that's been downsized? It gives them the opportunity to flip their 401k/IRA/other qualified funds into a small business or franchise thereby providing an income stream for them and their family. You would be able to either buy the business outright or leverage it against an SBA or conventional loan for a larger deal.

 

Would you like a chance to talk to us about this? Give Suzy a call at 281-954-6023 or email suzy@drdacpa.com for a free consultation.

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