We understand you wish to invest additional 401(k) monies into your Corporation. There are a number of required steps to accomplish an additional stock purchase between your 401(k) Plan and your Corporation.
The below list is not intended to be exhaustive but describes some of the requirements related to re-opening the private stock offering and making an additional investment of 401(k)/retirement monies into your Corporation:
- You need to make sure the stock offering is still open or re-open the private stock offering. If your original stock offering is closed you will need to re-open the stock offering by way of a Corporate Resolution and notice to your eligible employees.
- Generally, the stock needs to be valued so that the purchase of additional stock is done for fair market value. Depending on how much time has passed since the initial private stock purchase (and/or the last valuation) you may be able to obtain a more informal valuation.
- Make sure you are offering the stock to only those eligible. The stock offering document will generally detail who is eligible to participate in this type of investment. Generally, it is limited to 1) any W-2 employee; 2) not otherwise excluded from the plan; and 3) who has rollover monies to make the investment. There may be further restrictions. Now, these restrictions could be changed if you are going to do a new offering. You could make the requirements more liberal say to allow the use of employee deferral monies (if you made your 2016 or 2017 contribution of $50k + that money would then be available for an additional stock purchase, if you did change the offering requirements).
- Once you get through the above requirements, Leading Retirement Solutions would assist with getting employees set up with a 401(k) account (not a new plan, we would just set up a separate participant account), help them roll their monies from old IRA/401k accounts into the 401(k) Plan and then assist with getting the monies invested into the Corporation by transmitting the monies from the 401(k) account to the corporate bank account.
- Upon completion of these additional investments, we need to receive an updated corporate stock ledger memorializing the revised ownership of the corporation.
Leading Retirement Solutions
(206) 430-5084 phone
(800) 974-2814 (toll free)
Our mission: to proactively support organizations and lead them toward a secure future.