Businesses You Can Start Using a 401(k)

Businesses You Can Start Using a 401 K

If you’re thinking about starting a business, finding and securing funding can be one of the most difficult challenges to overcome. 

Many people consider using their 401(k) (or retirement savings) as a form of business financing. 

But is this right for you?

If you’re looking for some low-risk businesses you can start using a 401(k), you’ve come to the right place. 

How Do I Rollover My 401(k) to a Business? 

Before deciding to use your 401K to start a business, you’ll want to meet with a certified financial planner first. There is some risk involved with using your retirement savings to finance a business, so it’s important that you hash out your options first. 

The most obvious risk? If you withdraw from your 401k to start a business, you are going to have less money set aside for your retirement—it’s as simple as that. 

There are also some tax implications. While you can avoid many tax penalties with a ROBS, or Rollovers as Business Startups program, this is an incredibly complicated process that will require the help of a business attorney and tax professional to navigate. Don’t forget about the potential liability of starting a business, too. The risks are magnified when you are using your retirement savings to do so.

Coming up with a retirement plan that is financially feasible can be a daunting task. Don’t spend your nest egg until you’ve met with a qualified financial planner who can advise you on the best 401 K to start and how to spend 401 K funds later on. There are all kinds of business failures out there that prove that someone can easily lose a large nest egg because of poor retirement business financing decisions.

If you decide this is the right path for you, you will have three options to finance your business. You can use a 401 K business loan, use rollovers as business startups (known as ROBS), or you can take a distribution from your 401 K retirement account. Early withdrawal is another option, but for most people, not recommended.

And if you decide that using your 401 K is not the right option for you, there are plenty of other ways to start a business. You could apply for a business loan, look into a 0% intro APR business credit card, or pursue alternative business financing options. 

When you’re ready to start your business, you may want to consider some of these exciting business opportunities. Believe it or not, you can launch many types of businesses from home — many of them for less than $5,000. 

Best Businesses to Start Using Your Retirement Savings


In this day and age, it seems like just about everyone is a consultant in something. Whether you were a doctor, banker, or marketer before you retired, there are plenty of ways to use your expertise to build a lucrative business after you retire. Starting a small business in consulting is a smart retirement plan that requires minimal business financing.

You could even be more general and pursue a new business as a career consultant or academic adviser, too. You may want to consider using your 401 K to explore one of these options. You won’t need much business financing, making this a great business idea for a 401 K to start.

If you become a consultant, you can provide advice in a certain area. As a retiree, you likely have years of experience and skills that can benefit individuals, companies, and entire industries. You don’t even need to have a perfect track record in order to start this kind of business with your nest egg! Often, sharing your business failures with others is a great way to help people learn.

And you wouldn’t need to drain your 401 K to start a business like this either. Instead, invest some of your money in a business license, a good-looking website, and some introductory courses that will teach you the ins and outs-of running a profitable consulting business. As your business grows, you may be able to hire additional employees, too.

Bed and Breakfast 

Owning a bed and breakfast may be something that you and your spouse have dreamed of for a long time—and once you retire, this dream can become a reality. It’s one of the most expensive businesses to start with a 401 K, but it can certainly be done. 

If you enjoy having a full house, and the kids have already flown the nest, starting a bed and breakfast is a great way to satisfy those needs. You can start a bed and breakfast out of your own home or purchase a fixer-upper and do the necessary repairs yourself (or hire them out). 

As a business owner, you’ll have plenty of flexibility to pursue your own retirement plan and dream, while also making some extra money on the side.

The average bed and breakfast, in reality, is really just a large home of around 5,000 to 6,000 square feet. You will want around six bedrooms or so in order to provide a quaint atmosphere without making your guests feel overcrowded.

Starting a bed and breakfast can be somewhat labor intensive, but if you’re willing to hire out some of the daily tasks (like maintenance and cooking) you may be able to save on some of the legwork so you can actually enjoy your retirement. The smartest business owners in this kind of retirement plan outsource as many of the day-to-day tasks as possible.

Using your 401k for good insurance is key for this kind of business, too, as you’ll have a bit more liability than you might in other business start-ups. 

Property Management

Using your 401 K loan to start a business as a property manager is a bit less complicated than running a bed and breakfast—you don’t have to actually own the property. Instead, you’ll run your business as a subcontractor, a person hired at a property that is owned by another company or person. You could offer property management services to several properties, in fact. 

As you might expect from the title alone, somebody who works in property management will oversee the day-to-day functioning of a residential or commercial property. You might do basic repair work or oversee things like key drop-offs and lockouts. 

Sometimes, you may be able to negotiate a salary that includes free rent or other benefits. When you are starting this kind of business, expect to invest most of your 401 K funding in things like advertising and equipment, along with a basic van or truck to help you haul around all of your gear. 

Buy a Business or Become a Franchisee

Building a business from scratch is no small task. Almost 80% of all small businesses fail within the first five years, so if you’re not willing to take this kind of risk, you may just want to invest your 401 K money in a sure thing. Consider Investing in a business that’s already up and off the ground, and you won’t have to do much—just keep it running. As a business owner, you can come up with a plan to make your management as hands-off or as hands-on as you would like.

You could also become a franchisee. There are hundreds, if not thousands, of potential franchises you could join to start a business with your 401 K. Some options include Dunkin’ Donuts, a UPS Store, Sonic, or 7-Eleven. You’ll need quite a bit of start-up cash for this business endeavor, but it’s almost guaranteed to be a sure thing. It’s a great way to start a business with a 401 K.

After all, who doesn’t love Dunkin’ Donuts?

Become an Angel Investor

If you’ve worked hard throughout your entire career, you may want to consider investing your 401 K savings to start this kind of small business.

Angel investing is when you invest in a small company, hoping that one will become the next big thing. It’s a bit more complicated than it sounds, but the nuts and bolts of angel investing is that you will invest your cash in a business, and in return, as an investor, you will receive some form of equity or ownership in that business. 

You will want to make sure your finances are in good shape before you do this. While angel investing with your 401 K loan can make you a ton of money, it can also lose you a lot of money, too. 

Buy and Sell

Are you good at finding products that are being sold below market price—and then reselling them for twice what you paid? If so, a small business that specializes in buying and selling might be one of the best business start-ups to consider with your 401 K business loan.

There are a few ways in which you can source your products. You can look for them on the clearance rack or find them being sold on the cheap online. You might just scour local garage sales or auctions to find hidden treasures.

Whatever the case might be, you can sell products at a premium by listing them locally (you can use seller’s marketplaces like Facebook and Craigslist) or online. You can sell all kinds of products on Amazon, eBay, and Etsy. You can use as little or as much of your retirement funds or 401 K loan as you would like. 

House Painting

There’s nothing quite as fulfilling and serene as painting—and if you like to paint (and are good at it), you may want to consider starting a business as a house painter.

You won’t need to purchase much to get started, so you shouldn’t have to totally drain your 401 K. However, you may want to invest in a truck that’s large enough to haul around your ladders, supplies, and paint. 

This is a great way to not only build a successful business but also to get outside and soak up some vitamin D in your retirement. 

Home Repairs

If you consider yourself a jack-of-all-trades when it comes to fixing things around the house, starting a business in home repair is a smart way to use your 401 K loan. You don’t need a lot of money to start this kind of business, but you do need some technical skills. You should be good at making all kinds of repairs, such as plumbing or other issues around the house.

Paying for a business license and good insurance will both be vital when you’re in this line of work. There is some liability involved with going into people’s homes to work, so you’ll want to make sure you’re covered. Otherwise, you won’t have to use very many of your 401 K funds to start a business in home repairs.


Are you handy with a shovel or a mower? Is arranging flowers and picking out beautiful perennials your idea of a good time?

If so, starting a landscaping business with your 401 K loan is a great way to spend some of your retirement funds. You won’t need to invest much money in your business when you are first getting started. Usually, you’ll just need a few grand to finance some basic equipment, like a lawn mower and some trimmers. 

Good marketing is also essential. You’ll probably be able to get referrals as your clients talk to their friends about your excellent work, but when you’re first getting started, you’ll want to spend some of your money from an early withdrawal on a 401 K retirement plan or alternative business financing on a basic website. 

Life Coaching 

By the time you are ready to retire, you have a wealth of knowledge about the way the world works. If you really want to make a difference, you might want to consider starting a business as a life coach with your retirement funds or 401 K business loan. You can really make a difference in the world! 

As a life coach, you can teach others what it takes to succeed. This can be in the corporate world, in a specific industry, or just the general public. 

When you are first starting a business as a life coach, it will be extremely beneficial if you can take a few classes to teach you the ropes. You may also want to invest your retirement or 401 K funds in a business license and some decent marketing materials, like a nice-looking website. 

Network Marketing 

Network marketing is a great way to make money in your retirement, and you don’t need to drain your 401 K business financing to do it. Lots of people frown upon this kind of business, but the reality is that there are lots of network marketing companies out there that offer plenty of incentives for small business owners who are interested in getting started with network marketing. 

Some of the best companies to consider include Pampered Chef, Avon, and Herbalife. This business model is pretty simple at its core. You’ll sign up to work under another seller in the company. You’ll sell products and recruit others to sell beneath you on this plan. Sometimes you have to spend some money to purchase your initial inventory in this line of work.

When they sell products, you will get a cut of the earnings. You can invest time and money from your 401 K loan into teaching others how to sell better, which will give you a better chance at succeeding at starting this kind of business in retirement.


Are you handy with a spatula and some measuring cups? If so, a new business as a caterer might be the right retirement plan for you. This is a business idea that will take a bit of start-up cash to begin with, so it may make sense to tap into your 401 K loan or retirement account for the necessary funding. 

As long as you know how to make mouthwatering meals and are organized enough to handle all the details of scheduling, attending, and preparing for events, you can own a successful catering business. 

You will want to invest in some cooking supplies and equipment, including access to an inspected kitchen if that’s something that is required by state law where you live. If you want to invest your time and 401 K funds in a more portable setup, you could always buy a food truck and turn it into a portable catering service, too. 

Taxes and Bookkeeping

Nothing in life is certain—except for death and taxes. At least that’s what Benjamin Franklin said. And for many people, that’s true. Therefore, starting a business in tax services is one of the smartest and most reliable plans for you to use your 401 K funds or retirement funds.

After all, people are always going to have to do taxes, and most people hate doing them on their own. If you enjoy doing tax work, or at least have the skills necessary to complete the paperwork for others, you may want to consider opening up a tax service. 

To work as a tax professional, you will need to register with the IRS and pass a proficiency exam. You will also have to complete several hours of annual continued education training each year. You can often take classes with tax companies like H&R Block to meet these requirements.

This is where the bulk of your funding will go, although you may also want to invest some of your 401 K loan in an office space and some tax preparation software. A good website and other marketing tools will be essential, too, especially, as you’re first getting your name and reputation out there. 

Sell Online Courses

You don’t have to be a retired teacher in order to profit from your expertise. You can easily sell online courses as long as you have some kind of skill that other people would pay to learn. You just have to be somewhat skilled at explaining things.

Selling online courses is a good retirement plan and won’t take up all of your retirement funds or 401 K loan, either. You just need to have a plan in place for what you want to sell, how much you want to charge, and what website you want to use to sell your courses.

Sell your courses via an online marketplace like Udemy, or build your own website. You won’t have to make a huge investment (other than your time). In most cases, you’ll only need to pay for site memberships or for the fees associated with building your own website. 

Amazon FBA

Unless you’ve been living under a rock, you’ve probably already heard of Amazon. This online retail giant sells just about every kind of product, good, and ware in the world. You can partner with Amazon to plan and start your own small business. This is a solid retirement plan that will allow you to invest as little or as much of your 401 K loan or retirement account funding as you would like.

Usually, when you’re selling items online, you’ll buy items in bulk and store them somewhere. You can then sell them on your website using content marketing, advertising, and other strategies. When a purchase is made, you ship the items.

Fulfillment by Amazon takes much of the legwork out of this kind of business, and the premise for this business plan is simple. You sell the items on your website, and Amazon picks, packs, and ships the orders for you. You don’t have to worry about the logistical challenges of running an e-commerce business with your 401 K loan, nor do you need a large warehouse to store all of your products. 

This business plan will require both research and start-up capital to begin. You will need to do some digging to find out what kind of product niche would be best for you and for making a profit—and what the people want—and then you’ll need to purchase those products.

List them for sale on your website, and Amazon will do the rest! This is one of the most hands-off kinds of business to start with a 401 K loan.

Sell Creative Products 

Do you have a knack for knitting? Maybe quilting is your thing or painting. Whatever the case may be, there is a huge demand out there for handcrafted goods, and all kinds of craft business start-ups appear each year.

You can easily start a business by investing your 401 K in a crafting or creative products business. While you can do most of your business at craft fairs and flea markets, you can also use online sites like Etsy. You’ll need to pay some seller’s fees along with buying some basic equipment to help you get your inventory fired up. Otherwise, this is a relatively low-cost way to start a business using your 401 K. 

Affiliate Marketing

As long as you have some writing skills, sales capabilities, and marginal technical know-how, you can easily start a business in affiliate marketing by using your retirement account or 401 K.

As an affiliate marketer, you don’t necessarily sell products that you have made or produced yourself. You don’t even need to use the products that you sell with this kind of business plan. Instead, you will host advertisements or links that sell products from other businesses. When someone clicks on a link or an ad, they will be redirected to that business’ website to make a purchase. You’ll get a cut of the profits. 

You can easily earn a bit of extra money to supplement your retirement financing when you delve into affiliate marketing. You don’t need to use much of your 401 K loan or other kinds of financing to get started either—you’ll just need to be able to start a blog in some kind of niche topic. 

It should only cost you a few hundred dollars out of your 401 K to start a blog, but you can invest more money in your business as you see fit.


Dropshipping is another simple business you can start when you use your 401 K plan. In many aspects, it’s quite similar to Amazon FBA. You will be selling items on your website that somebody else has manufactured. As a dropshipper, you will only need to advertise and market your products that are for sale. 

The plan is simple. When someone makes a purchase, your manufacturer will ship the item, and you get a cut of the final profits. You handle all the details of the transaction, including the customer service, while a third party handles the shipping and handling. 

Starting a dropshipping business is a great way to build some extra income to help you meet your retirement plan. E-commerce is rapidly growing and is always open to new players—you don’t have to worry about competition from other businesses. 

It requires you to use minimal capital and overhead. You’ll need to front a little bit of money from your 401 K or retirement account for your initial inventory, but besides that, you won’t have to worry about much. Your business location can be flexible; as long as you have a reliable Internet connection, you can run your business from anywhere. 

And you know what’s one of the best parts about starting a dropshipping business? You don’t have to create your own products to sell, nor do you have to buy them in bulk from your partnering retailers. You can build up slowly as you pursue your own goals and business plan. 

What to Consider: Is it Safe to Use My 401 K to Start a Business?

Starting a business with the funds from a 401 K makes a lot of sense for most people. After all, you have a lot of your personal savings tied up into investments and retirement accounts, so why not make the most of it to pursue a lifelong passion?

There is definitely some risk involved, so be sure to consider the tax and liability issues of this endeavor as well as any penalties related to early withdrawal from your retirement plan. Otherwise, consider some of these business ideas as you pursue your next adventure. 

With the business financing from your 401 K in place, there’s nothing left to stop you!