BORSA IN ACTION

BORSA™ Plan in ACTION



BORSA is a self-directed 401(k) plan that allows you to access retirement funds (401(k), IRA, other qualified funds) TAX and PENALTY FREE to use as equity in a business start-up, acquisition, or to add more capital to your existing business. Typically if you “cash out” (take a distribution) from a qualified plan you would be taxed as ordinary income. You would also be subject to a 10% penalty if you are below age 59 1/2 . The combination of state and federal income tax as well as the penalty can result in an erosion of 40-50% of your retirement savings.

DRDA CPAs & Business Consultants has a solution – The BORSA™ Plan. This structure allows you to transfer money currently held in you qualified retirement accounts into a new business without a deemed distribution, taxes, penalties, or loans. The structure and path to the solution are as follows:

STEP 1: SET UP A C CORPORATION

The process begins with establishing a new corporation using the proper legal structure to support the establishment and operation of the company's qualified retirement plan.

DRDA will form a C Corporation for you.

  • We will incorporate your new company with the Secretary of State in the state where you plan to do business.

  • We will obtain a Federal Taxpayer Identification Number (EIN) for your new C-Corporation.

  • We will prepare your corporate book and stock certificates and forward them to you.

  • With your new corporate charter, authorizing resolution, and corporate EIN, your bank will open a corporate checking account for you.

STEP 2: DESIGN A NEW QUALIFIED RETIREMENT PLAN

To avoid early withdrawal penalties and preserve tax-deferred status, a new retirement plan is created for which you'll move your existing funds. We will customize your plan, taking into account the needs of your business and employees.

  • We will prepare the adoption documents for your new 401(k) Plan & Trust.

  • We will draft your BORSA™ documents.

  • We will send the BORSA ™ documents to you and schedule a conference to review them.

  • We obtain an EIN for your new 401(k) Plan & Trust.

  • With your new plan documents, corporate resolutions, and 401(k) Plan & Trust EIN, your bank will open a trust checking account for you.

STEP 3: TRANSFER YOUR RETIREMENT FUNDS INTO THE NEW PLAN

After the corporate retirement plan is in place, the BORSA Team will create the new account according to the plan's design and specifications. We will guide you through opening the appropriate accounts, guide you through the roll and through the subsequent investment into the corporation.

  • We will help you in the preparation of any forms to secure the “direct rollover” of your retirement assets into your new trust checking account.

STEP 4: PURCHASE STOCK IN THE CORPORATION

The rollover funds can now be invested in the newly formed C Corporation by purchasing stock in the corporation. The stock purchased by the plan is credited to your account based on your investment decisions.

  • You, as trustee, will transfer money from the trust checking account to the corporate checking account. Your new C-Corporation will then issue shares of its stock to the new 401(k) Plan & Trust.

STEP 5: USE THE FUNDS FOR YOUR BUSINESS

You have the capital to start, purchase or recapitalize your new small business or franchise.

  • The corporation will now have cash in the bank and no debt. Your debt-free, cash-rich corporation will be very attractive to prospective lenders should you need additional financing.

ANNUAL REQUIREMENTS:

  • The plan will require administration, trust accounting, and federal reporting every year.

  • Additionally, a valuation of the company stock will be required each year the retirement plan holds non-marketable stock.

  • All points of compliance are equally important but not all of them have a fee associated with them. The timing and amount of the payment and on-going cost of compliance are as follows:

    • $4,995 to DRDA to engage for a BORSA Plan.

    • $300 to valuation firm (list will be provided) for a Capitalization Report 90 days following funding into C Corp.

    • $1,500 to valuation firm in First Quarter on following year for the Initial Year End Valuation.

    • $800 to DRDA in the First Quarter of the following year for the annual reporting (Form 5500 to IRS and SAR to DOL).

    • $750 to valuation firm in the First Quarter of subsequent years for an Updated Year End Valuation.
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    • Steps #4 & #5 will repeat annually.
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  • If you have more than 10 participants in your plan the cost of the annual reporting will go up based on the number of participants.

  • If you have a major change to your business model your updated year end valuation may go back up to $1,500 that year.

  • Each corporate/plan year end, we will estimate tax deductible contributions that you can make to your BORSA.

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The BORSA Difference

The BORSA Plan is the leading program in the Nation for business start-ups and entrpreneurs.


  • Guidlines, Requirements and Qualification.

  • Timeline, Process Plan and Execution.

  • Compliance and Documentation.

  • Additional resources to get your business up and running with success.

ARE YOU INTERESTED IN...

  • Starting a New Business?

  • Buying an Existing Business?

  • Add Funds to an Existing Business?

  • ROBS 401(k)?

  • How a self-directed 401k can help with an SBA Loan?

FREE CONSULTATION .

  • We are here to help

    What is on your mind? If you have any questions about our plan, please ask and we will respond within 24 hours.

DRDA
CPA"s & BUSINESS CONSULTANTS

DRDA is a proactive CPA firm offering guidance and support so you can achieve your business and financial goals.

1120 Bay Area Blvd,
Houston, TX 77058

Phone: 281-488-2022

Email: info@drdacpa.com

DRDA, PLLC BBB Business Review

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