More entrepreneurs are funding their businesses with money from an IRA or 401(k) because of the tight credit market. That usually means paying a 10% withdrawal penalty, although some self-directed IRA plans can get around the punitive charge by the IRS. Even then, experts advise caution. "I would say maybe 5% of small businesses can viably use retirement money," says Sandy Abalos, a Phoenix-based CPA.
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