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I just set up a 401K for my small business. Can I fund it with stock from my personal account?

Feb 23, 2012 by Daniel from San Luis Obispo, CA in  |  Flag
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No. This would be considered a prohibited transaction so is not allowed.

3 Comments   |  Flag   |  Feb 23, 2012 from San Francisco, CA
Daniel

So it can only be funded by cash?

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Flag |  Feb 23, 2012 near San Luis Obispo, CA
James P. Dowd, CFA

That's correct. Typically it's done through a payroll deduction. Certain plans, such as solo 401k plans, allow direct cash contributions up to the filing deadline, the logic being that you may not know your contribution limits until then. Contributions of stock or other property are never permitted.

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Flag |  Feb 23, 2012 near San Francisco, CA
Daniel

Awesome thank you.

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Flag |  Feb 23, 2012 near San Luis Obispo, CA

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David Kleinik Level 15

Daniel,

This is a question to consult with your Tax Advisor. Technically you can fund it with a personal account BUT, the purpose of your 401k as the business owner is to mainly save money from the profits from your business is making and have a business tax write off. Also to make your business more competitive in the hiring market to bring talent to your business.

Hope this helps, David Kleinik

Comment   |  Flag   |  Feb 23, 2012 from Jacksonville, FL

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