[mkporto]

What happens when you have used your 401K to Self-Directed 401k to start a business and the business is failing? What do we need to do?

[ebaines]

Not sure what you're asking here. If the business is failing, then the value of your self-dircted IRA investement has declined - perhaps to zero. Just as if you had invested in a failing stock. Are you wondering what options you have for whatever may be left in your self-directed IRA account? I suggest you talk to your plan custodian.

[mkporto]

Thank you for your response. We bought a franchise last year, it has not done well and our money from the 401K we used to fund the business is almost gone. What should we do?

[ebaines]

Not knowing any details about your situation - if you don't think there's much hope for a recovery by ths franchise, you might want to just take whatever you can out of the investment and cut your losses - if that's possible. Then you should work to build your retirement fund back up. Investing in a franchise is obviously a very risky thing to do with your retirement money - I would counsel a more traditional approach built primarily around bond investements, at least until the market signals a turn around.

[mkporto]

Thank you, can I ask what type of bond investments?

[ebaines]

For most people a bond fund makes sense. Buying individual bonds is not recomneded unless you have enough to adequately diversify across multiple issuers.