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This is not a loan. Many companies or employers provide the ability to take a loan of up to 50% against your 401(k). Our structure allows you access up to 100% of your funds without being subject to penalties or a taxable event.

The ability to self direct your retirement accounts has actually been available for many years but the financial industry has not embraced or educated people about it as they make all their fees from managing YOUR money.

The prohibited transaction rules disallow certain types of exchanges. Normally, it would be prohibited for a retirement plan to purchase the stock or membership units of its sponsoring company. In fact, it is prohibited for most business entities. If a partnership, S corporation or LLC tries to do this, the IRS could disqualify the plan and assess substantial tax penalties.

Qualifying Employer Securities
Congress has provided some exemptions from the prohibited transaction rules within the Tax Code ("IRC") and the ERISA statute. If several requirements are met, IRC § 4975(d)(13) and ERISA § 408(e) permit a plan to acquire "qualifying employer securities" ("QES"). Such securities include, among other things, the stock of a corporation. This specifically refers to the shares of a C corporation. Under the express language of IRC § 4975(f)(6) and ERISA § 408(d), an S corporation does not qualify for this exemption. Partnerships and LLCs are likewise excluded because they do not issue stock. Moreover, it cannot be just any C corporation – it must be the "employer" that is sponsoring the retirement plan.

Normally, ERISA §§ 407(a)(2)-(4) would limit the holding of the sponsor company's stock to no more than 10% of the total plan assets (The 10% rule was created to protect employees from Enron-like practices). ERISA § 408(e) provides an exemption to this limitation.

The three requirements of ERISA § 408(e) are:

1. The purchase, sale or lease is for adequate consideration;
2. No commission is charged; and
3. The plan is an eligible individual account plan.

Adequate Consideration
The first requirement is that the plan must transact with the stock seller/buyer using fair market value of the stock. This is the "adequate consideration" rule in ERISA § 408(e)(1). Generally, an independent, qualified appraiser must be used to determine fair market value although this may be disregarded when it is the purchase of the corporation's initial issue of stock. Once the corporation has been operating, causing its inherent value to change, any subsequent purchases or sales of stock with respect to the plan must be appraised to ensure compliance.

No Commissions
The second requirement is that no commission can be charged for the transaction.

Eligible Individual Account Plans
The third requirement, under ERISA § 408(e)(3), is that the plan be an "eligible individual account plan" ("EIAP") which includes 401k profit sharing plans and ESOPs, among others. A 401(k) plan qualifies as a profit sharing plan so your plan would be an EIAP.

Other Requirements
In addition to ERISA § 408(e), there are other requirements to qualify for this exemption. The plan must expressly state that such investments in company stock is permitted and the employer and employee contributions must be voluntarily invested in the stock. Any portion of the investments that is involuntarily invested in company stock is still subject to the 10% rule.

Summary
If each of these requirements is met, then the plan is permitted to exceed the 10% limitation:

1. The stock is from the sponsoring C corporation;
2. The stock (QES) transaction is for adequate consideration (i.e., independently appraised fair market value);
3. No commission is charged for the transaction;
4. The plan qualifies as an EIAP;
5. The plan language expressly authorizes plan investments in qualifying employer stock;
6. The investment is voluntary; and
7. The investment is prudent under applicable fiduciary rules.

With our self directed program, you can use your 401k, IRA, profit sharing, SEP or annuity plan to finance a new business. In most cases Roth funds cannot be used unless Roth 401k due to their post tax structure.

At Apprion we believe that you are best served when you are in control of your financial future. We understand that this type of opportunity is not a good fit for everyone and requires a more entrepreneurial and sophisticated investor.

Our one-time set up fee covers most of the costs you will incur. Your account representative will discuss with you any additional fees you may encounter that are unique to your situation, such as any expedited services you may request, any additional incorporation services needed or filings you may require.

Yes! We can assist you in obtaining SBA, conventional or equipment financing. We also have an entire array of flat fee outsourcing services at your disposal so you can stay focused on running your business and keeping costs down.