How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Robin D. Your Own Question
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 13339
Experience:  15years with H & R Block. Divisional leader, Instructor
14155347
Type Your Tax Question Here...
Robin D. is online now
A new question is answered every 9 seconds

I have a profit sharing trust with my employer instead of a

Customer Question

I have a profit sharing trust with my employer instead of a 401K. I am looking to leave this employer to start my own business.
Can I avoid tax penalties if I invest my profit sharing trust fully into my newly formed business?
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.

Hello

401k and profit sharing plans are both forms of retirement plans. They allow employees to make pre-tax contributions to an account where contributions and earnings are not taxed until distributed.

While rolling over a distribution from a tax deferred account to another tax deferred account means no tax on the "distribution" investing in a business venture would not afford the same tax deferring treatment.

Unfortunately, using the money to start your new business would not avoid tax on the distribution for you.

Expert:  Robin D. replied 1 year ago.

If my answer addressed your question please rate below or above (let me know if you have difficulty as I believe the system changed), if you need more information reply below.

Expert:  Robin D. replied 1 year ago.

Please advise if you need more information or rating in a positive way is acceptable.

Expert:  Robin D. replied 1 year ago.

My goal is to provide you with excellent service.

Expert:  Robin D. replied 12 months ago.

Hello Jeff

Checking back to see if you posted a response.