Why A Business Plan Is Necessary

The Business Plan is a representation of the entrepreneur and the entrepreneur’s understanding and grasp of the business venture.

 

A Plan Trustee / Fiduciary must be able to prove, though the gathering of evidential information, that the entrepreneur was able to demonstrate the viability of the business as a prudent investment for a retirement plan. The Business Plan, along with other information such as a business valuation, is part of this evidential information.

 

It is important to remember that a Retirement Plan is a third party investor and it is necessary to present information to the plan to assist it in making a prudent investment regarding the small business investment opportunity. Remember, the IRS and DOL see a retirement plan as an independent party and the plan must be treated with the same level of respect as any other investor.

 

In the end, a retirement plan investment file should contain information similar to that which would have been provided had the plan been a person because a person would expect to be provided information necessary to make an educated informed investment decision.

Additionally, the Business Plan will go a long way in helping address inquiries and discovery issues in the event of an IRS or DOL audit.

Why A Business Plan Is Necessary

The Business Plan is a representation of the entrepreneur and the entrepreneur’s understanding and grasp of the business venture.

A Plan Trustee / Fiduciary must be able to prove, though the gathering of evidential information, that the entrepreneur was able to demonstrate the viability of the business as a prudent investment for a retirement plan. The Business Plan, along with other information such as a business valuation, is part of this evidential information.

It is important to remember that a Retirement Plan is a third party investor, and it is necessary to present information to the plan to assist it in making a prudent investment regarding the small business investment opportunity. Remember, the IRS and DOL see a retirement plan as an independent party and the plan must be treated with the same level of respect as any other investor.

In the end, a retirement plan investment file should contain information similar to that which would have been provided had the plan been a person because a person would expect to be provided information necessary to make an educated informed investment decision.

Additionally, the Business Plan will go a long way in helping address inquiries and discovery issues in the event of an IRS or DOL audit.

You are welcome to contact us with your questions.  Additionally you may read some of our articles about using a retirement plan to buy a business and read more of our tips and updates.