Using your nest egg to hatch a business

12/16/2008 | Bloomberg Businessweek

With banks refusing to lend, more entrepreneurs are turning to their retirement accounts to fund their businesses -- without paying stiff penalties. A little-known loophole allows individuals to start a corporation, create a 401(k), roll existing savings into the 401(k) and then use those funds to buy shares in the corporation. Voila! Instant capital. Though investment advisers may cringe at the idea, it's perfectly legal and growing in popularity.

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