Current Events > 401k question - can you transfer a balance to stock in a company you own?

(+) Yeah! (+)

I've tried googling but no results.

When I get laid off I want to have a company already existing and transfer the balance of my 401k into stock of the company I own. Can this be done?

@Drpooplol
@Darkman124
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You're suggesting transfer X dollar amount of stock you currently have at a different company into a company you're creating?
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PIITB415 posted...

You're suggesting transfer X dollar amount of stock you currently have at a different company into a company you're creating?

I am getting laid off in October. I am looking to own my own business. When you leave a company you can transfer your 401k balance to a new 401k account. I want to know if there is any way to have my own company shares be eligible to be bought by a 401k account.
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KILBOTz posted...

PIITB415 posted...

You're suggesting transfer X dollar amount of stock you currently have at a different company into a company you're creating?

I am getting laid off in October. I am looking to own my own business. When you leave a company you can transfer your 401k balance to a new 401k account. I want to know if there is any way to have my own company shares be eligible to be bought by a 401k account.

Technically yes but your company would already need to have all that set up. There is a lot more to it than just starting a company and having it sorted immediately

https://www.schwab.com/public/schwab/investing/retirement_and_planning/understanding_iras/rollover_ira
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We're no strangers to love...
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lol did you even do an ipo yet?

CharlesBronson posted...

lol did you even do an ipo yet?

I wouldn't do an IPO, this would be a privately held company.
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PIITB415 posted...

KILBOTz posted...

PIITB415 posted...

You're suggesting transfer X dollar amount of stock you currently have at a different company into a company you're creating?

I am getting laid off in October. I am looking to own my own business. When you leave a company you can transfer your 401k balance to a new 401k account. I want to know if there is any way to have my own company shares be eligible to be bought by a 401k account.

Technically yes but your company would already need to have all that set up. There is a lot more to it than just starting a company and having it sorted immediately

https://www.schwab.com/public/schwab/investing/retirement_and_planning/understanding_iras/rollover_ira

Thanks, my current company offers all sorts of free professional help. I will set up something with a business start up specialist and a personal financial expert and that should help me understand the process.
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are you basically asking if you can contribute liquidity to your company from your 401k without taking the tax penalty

the answer is probably yes, i don't know the specifics of how to do it--drpooplol probably does

but he'll tell you the same thing i am about to:

don't
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Darkman124 posted...

are you basically asking if you can contribute liquidity to your company from your 401k without taking the tax penalty

the answer is probably yes, i don't know the specifics of how to do it--drpooplol probably does

but he'll tell you the same thing i am about to:

don't

Basically this.
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Anything that was put in the 401k needs to be rolled over into another retirement account, or else you will to pay a penalty and tax, unless it is a Roth. Then it would only be the penalty in the case of a roth since I am guessing you are not 59 and a half. That's how I understand it. Someone correct me if I am wrong.
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Hmm this is something I don't know by heart, but I'm like 95% sure the answer is FUCK NO.

Also, I don't necessarily agree with Darkman that you shouldn't. Just be aware that you're pretty much gambling without much of a payoff.

Even if you could do it, think of the opportunity cost of the gains you'll (likely) get by keeping your funds in the market. You're comparing that less the cost of interest from loans to the gains you'll get from your campground. The investment is likely not sound.

BUT

If it's your passion. Do it, bruh.
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Drpooplol posted...

Hmm this is something I don't know by heart, but I'm like 95% sure the answer is FUCK NO.

Also, I don't necessarily agree with Darkman that you shouldn't. Just be aware that you're pretty much gambling without much of a payoff.

Even if you could do it, think of the opportunity cost of the gains you'll (likely) get by keeping your funds in the market. You're comparing that less the cost of interest from loans to the gains you'll get from your campground. The investment is likely not sound.

BUT

If it's your passion. Do it, bruh.

lol the stock market is way overbought wwe has a p/e over 100 for example lol cash is the best place to be right now

lol fuck off
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So the reason I am considering it is because there is a seller offering good seller financing with a 50% down payment but to hit 50% I would either need to liquidate 401k or take out a 2nd mortgage on my rental property (or sell) which would kill the cash flow out of that unit.

So basically I can go to a bank with 30% down with selling my house and my non retirement account stocks and get a roughly 7% loan or I can get seller financing at 50% down with a 4% loan over 20 years no pre-payment penalty. At the 30% down payment I would be tapped out of cash then an unable to improve property quickly, and there is plenty of room to develop with good zoning and a good county to work with. Liquidizing the 401k would put me in a situation where it is generating good income right off the bad and I would have enough left over to add about 20 more spots which add around $100k a year in expected revenue based on current occupancy rates.

My other option is to sell or take out liquidity in my rental property. Quadplex has positive cash flow of about $30k a year, taking out $250k would cost me about $20k a year. Also it really feels like Seattle is in a bubble again so if my rents drop from $1800 to $1200 that would become a non-profitable venture then. Selling it I could easily afford the down payment and all the improvements I want, but I would be losing out on a reliable revenue stream then.

Writing it out I suppose a 3rd option is 30% down, take out only like $50k in liquidity in my property and use it improve the property to increase cash flow.
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KILBOTz posted...

So the reason I am considering it is because there is a seller offering good seller financing with a 50% down payment but to hit 50% I would either need to liquidate 401k or take out a 2nd mortgage on my rental property (or sell) which would kill the cash flow out of that unit.

So basically I can go to a bank with 30% down with selling my house and my non retirement account stocks and get a roughly 7% loan or I can get seller financing at 50% down with a 4% loan over 20 years no pre-payment penalty. At the 30% down payment I would be tapped out of cash then an unable to improve property quickly, and there is plenty of room to develop with good zoning and a good county to work with. Liquidizing the 401k would put me in a situation where it is generating good income right off the bad and I would have enough left over to add about 20 more spots which add around $100k a year in expected revenue based on current occupancy rates.

My other option is to sell or take out liquidity in my rental property. Quadplex has positive cash flow of about $30k a year, taking out $250k would cost me about $20k a year. Also it really feels like Seattle is in a bubble again so if my rents drop from $1800 to $1200 that would become a non-profitable venture then. Selling it I could easily afford the down payment and all the improvements I want, but I would be losing out on a reliable revenue stream then.

Writing it out I suppose a 3rd option is 30% down, take out only like $50k in liquidity in my property and use it improve the property to increase cash flow.

just sell everything and live in a tent

Fuck, dude. At this point with all the options you have available along with some tax implications, you should really look into going over this with a good fee-only financial planner. A dude who can get a better look into the solid concrete numbers will be able to give you a lot better perspective.
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yeah good point. i was wanting to get it done with a 1 time freebie but a few meetings would probably be better even paying for it.
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